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on Financial Development and Growth |
| By: | Sami Ben Naceur; Robert Blotevogel; Mark Fischer; Haiyan Shi |
| Abstract: | This paper examines how financial development affects the sources of growth—productivity and investment—using a sample of 145 countries for the period 1960-2011. We employ a range of econometric approaches, focusing on the CCA and MENA countries. The analysis looks beyond financial depth to capture the access, efficiency, stability, and openness dimensions of financial development. Yet even in this broad interpretation, financial development does not appear to be a magic bullet for economic growth. We cannot confirm earlier findings of an unambiguously positive relationship between financial development, investment, and productivity. The relationship is more complex. The influence of the different dimensions of financial development on the sources of growth varies across income levels and regions. |
| Date: | 2017–06–28 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:17/143&r=fdg |
| By: | Erwan Quintin (University of Wisconsin Madison); Dean Corbae (University of Wisconsin); Pedro Amaral (Federal Reserve Bank of Cleveland) |
| Abstract: | The existing literature on financial development focuses mostly on the causal impact of the quantity of financial intermediation on economic development. This paper, instead, focuses on the role of the financial sector in creating securities that cater to the needs of heterogeneous investors. To that end, we describe a dynamic extension of Allen and Gale ((1989) optimal security design model in which producers can tranche the stochastic cash flows they generate at a cost. Lower tranching costs in that environment lead to capital deepening and raise aggregate output. The implications of lower tranching costs for TFP, on the other hand, are fundamentally ambiguous. In other words, our model predicts that increased financial sophistication/complexity - a securitization boom, e.g. - can have adverse consequences on aggregate productivity as it is conventionally measured. |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:red:sed017:118&r=fdg |
| By: | Miho Sunaga (Graduate School of Economics, Osaka University) |
| Abstract: | I introduce nancial market friction into a neoclassical growth model. I consider a moral hazard problem between bankers and workers in the macroeconomic model. Using the model, this study analyzes how capital adequacy requirements for banks affect the economy. I show that strengthening capital adequacy requirements is desirable for an economy whose nancial market has not developed sufficiently. Regulatory authorities should pull up the minimum capital adequacy ratio in a country whose nancial market has not developed sufficiently. Moreover, there is no need to change the minimum cap- ital adequacy ratio in a country whose nancial market has developed sufficiently even if the economy experiences a recession. |
| Keywords: | Capital adequacy requirements; Economic Growth; Financial Intermedi- aries; Macro-prudential policies |
| JEL: | E44 G21 G28 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:osk:wpaper:1721&r=fdg |
| By: | Daniele Tori; Özlem Onaran |
| Abstract: | We estimate the effects of financialisation on physical investment in the developed and developing countries using panel data based on balance-sheets of publicly listed non-financial companies (NFCs) for the period 1995-2015. Among the developed economies, we focus on the cases of the USA, Japan, and a group of Western European countries. In the developing world, we present estimations based on the group of the NFCs in all developing countries as well as BRICS as a group- and country specific estimations for South Africa, South Korea, India, and China. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets. The negative impacts of financial incomes are non-linear with respect to the companies' size; financial income crowds out investment in large companies, and have a positive effect on the investment of only smaller, relatively more credit-constrained companies. Our findings support the ‘financialisation thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term concerns for productivity in both developed and developing countries. |
| Keywords: | financialisation, investment, non-financial sector, firm data, developing countries |
| JEL: | C23 D22 O16 |
| Date: | 2017–07 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp1707&r=fdg |
| By: | International Monetary Fund |
| Abstract: | Vietnam: Selected Issues |
| Date: | 2017–07–05 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:17/191&r=fdg |