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on Financial Development and Growth |
| By: | Ho, Sin-Yu; Njindan Iyke, Bernard |
| Abstract: | In this paper, we re-assess the finance-growth-poverty linkage in Ghana during the period 1960–2015. We account for structural changes and omitted variable bias, using a modified multivariate distributed lag framework. We find financial development to cause economic growth, which in turn causes poverty reduction in Ghana. This has useful policy implications. |
| Keywords: | Financial Development; Economic Growth; Poverty Reduction; Ghana. |
| JEL: | C32 E44 I32 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:87121&r=fdg |
| By: | Nilofer, Nilofer; Qayyum, Abdul |
| Abstract: | Investment is vital ingredients of growth in an economy. Saving contributes to investment which contributes to physical and human capital formation both of which promote growth of Gross Domestic Product (GDP) of a country. This study aims at determining the role of the three types of investment i.e., public, private and foreign direct investment (FDI) in the growth of Pakistan economy with a special focus on the contribution of FDI in GDP growth of the Pakistan. Cointegration analysis of time series data was used to analyze model. Autoregressive Distributed Lag (ARDL) approach has been used to analyze the long run relationship between GDP growth, investment and government expenditure for Pakistan using data (1970-2015). The results indicate that while public and private investment and lending rate have a positive impact on growth, public consumption and FDI decelerate GDP growth. Also the investor confidence should be bolstered by improving the law and order and security situation of the country and introducing investment friendly policies to further harness the positive impact of investment on growth. |
| Keywords: | Investment, FDI, Growth, Cointegration, Autoregressive Distributed Lag Model, Bounds Testing, Pakistan |
| JEL: | E22 O4 |
| Date: | 2018 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:86961&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:1707&r=fdg |
| By: | Daniele Tori (Open University); Özlem Onaran |
| Abstract: | In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies' size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Furthermore, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies' investment. This finding challenges the common wisdom on 'finance-growth nexus'. Our findings support the 'financialization 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 stagnation in productivity. |
| Keywords: | financialization, financial development, firm-level data, Europe |
| JEL: | C23 D22 G31 |
| Date: | 2017–06 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:1705&r=fdg |
| By: | Miriam Camarero (Jaume I University. Department of Economics, Av. de Vicent Sos Baynat s/n, E-12071 Castellón, Spain); Jesús Peiró-Palomino (University of Valencia, Department of Applied Economics II, Av. dels Tarongers, s/n Eastern Department Building E-46022 Valencia, Spain); Cecilio Tamarit (University of Valencia, INTECO Joint Research Unit. Department of Applied Economics II. PO Box 22.006 - E-46071 Valencia, Spain) |
| Abstract: | The purpose of the paper is to investigate the role that unbalanced net foreign asset positions play in the growth path of the economies. In particular, the hypothesis to be tested is whether external imbalances may constrain growth in debtor countries. We analyze a large sample of countries using Lane and Milesi-Ferretti “External Wealth of Nations Dataset” and employing both parametric and nonparametric techniques. We find a positive relationship between the external position and growth, although the impact differ between countries and temporal periods. |
| Keywords: | Economic growth, net external position, nonparametric regression |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:eec:wpaper:1808&r=fdg |