nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2019‒03‒04
eight papers chosen by
Georg Man

  1. Skewed Credit and Growth Dynamics after the Global Financial Crisis By Estrada, Gemma; Erce, Aitor; Park, Donghyun; Rojas , Juan
  2. Household Debt, Corporate Debt, and the Real Economy: Some Empirical Evidence By Park, Donghyun; Shin, Kwanho; Tian, Shu
  3. Financial Inclusion: New Measurement and Cross-Country Impact Assessment By Park, Cyn-Young; Mercado, Jr., Rogelio
  4. The effects of income and inflation on financial development: Evidence from heterogeneous panels By Ehigiamusoe, Kizito Uyi; Vinitha Guptan; Narayanan, Suresh
  5. Branch Banking and Regional Financial Markets:Evidence from Prewar Japan By Mathias Hoffmann; Tetsuji Okazaki; Toshihiro Okubo
  6. IDE chinois et croissance économique des pays d'Afrique sub-saharienne : approche par la MMG en données de panel By Fred EKA
  7. Sida and innovative finance: The case of loan guarantee schemes By Andersson, Per-Åke
  8. Une analyse de la contribution de la politique monétaire à la croissance économique: Étude spéciale By Christophe Blot; Paul Hubert

  1. By: Estrada, Gemma (Asian Development Bank); Erce, Aitor (European Stability Mechanism); Park, Donghyun (Asian Development Bank); Rojas , Juan (European Stability Mechanism)
    Abstract: A large empirical literature finds that financial development is beneficial for economic growth, although some recent evidence suggests otherwise. We contribute to the finance–growth literature by examining the role of credit growth skewness and long-run growth. Earlier literature found that credit growth skewness is negatively associated with economic growth. We revisit this relationship using a large and recent panel dataset that encompasses Organisation for Economic Co-operation and Development economies and the impact of the global financial crisis. While our results reconfirm an association between credit skewness and growth, the relationship is more nuanced than previously thought. We find that the beneficial effects from lower skewness—systemic financial risks—were evident only prior to 2000. Our findings help explain why boom–bust dynamics were positively associated with economic growth in emerging markets in the past and why the growth of advanced economies has been sluggish since the global financial crisis.
    Keywords: credit dynamics; economic growth; skewness
    JEL: F34 F36 F43 O41
    Date: 2018–10–16
  2. By: Park, Donghyun (Asian Development Bank); Shin, Kwanho (Korea University); Tian, Shu (Asian Development Bank)
    Abstract: The rapid accumulation of private debt is widely viewed as a major risk to financial and economic stability. This paper systematically and comprehensively assesses the effect of private debt buildup on economic growth. In the spirit of Mian, Sufi, and Verner (2017) that separately examine the effects of two types of private debt, i.e., household debt and corporate debt, on growth in developed economies, this study specifically provides new evidence on the growth–private debt nexus in both advanced and emerging market economies (EMEs). Moreover, we construct financial peaks in terms of the speed of debt accumulation rather than crisis dates and find that in both advanced and EMEs, corporate debt buildups cause more financial peaks than household debt buildups. Further, corporate debt-induced financial recessions inflict a bigger damage on output than household debt-induced financial recessions in EMEs. Overall, our evidence suggests that policy makers would do well to closely monitor not only household debt but also corporate debt.
    Keywords: : business cycle; corporate debt; crisis; debt; economic growth; household debt; output; private debt
    JEL: E32 E44 G01
    Date: 2018–12–18
  3. By: Park, Cyn-Young (Asian Development Bank); Mercado, Jr., Rogelio (South East Asian Central Banks Research and Training Centre)
    Abstract: This paper introduces a new index of financial inclusion for 151 economies using principal component analysis to compute weights for aggregating nine indicators of access, availability, and usage. It then assesses the impact of financial inclusion on poverty and income inequality. The results provide evidence that high- and middle-high-income economies with high financial inclusion have significantly lower poverty, while no such relation exists for middle-low and low-income economies. The nonlinearities in the cross-country determinants and impacts of financial inclusion on poverty and income inequality across income groups are important to choosing the appropriate policies for achieving inclusive growth in different development stages.
    Keywords: financial inclusion; income inequality; poverty
    JEL: G18 O11 O16
    Date: 2018–03–15
  4. By: Ehigiamusoe, Kizito Uyi; Vinitha Guptan; Narayanan, Suresh
    Abstract: This paper examines four unresolved issues regarding the effects of GDP and inflation on financial development: (i) Does GDP have uniform impact on financial development in heterogeneous income countries? (ii) Is the relationship non-linear? (iii) Does financial development vary with inflation rates? (iv) Does inflation moderate the effect of GDP on financial development? The authors employ the newly developed dynamic Common Correlated Effects (CCE) and dynamic panel system Generalized Method of Moments (GMM) on data from 125 countries. These techniques enable us to control for crosssectional dependence, heterogeneity and endogeneity. They show that GDP has a positive impact on financial development in high and middle-income countries, and the relationship is non-linear in over 60% of the countries. The authors also reveal that inflation has a negative effect on financial development in high- and medium-inflationary countries. Besides, high inflation moderates the effect of GDP on financial development in over 70% of the countries. They also show the countries where higher GDP is better for financial development and where it is not. They recommend some policy options based on the findings.
    Keywords: financial development,income,inflation rate
    JEL: G15 F10 E31
    Date: 2019
  5. By: Mathias Hoffmann (Department of Economics, University of Zurich); Tetsuji Okazaki (Faculty of Economics, The University of Tokyo); Toshihiro Okubo (Faculty of Economics, Keio University)
    Abstract: The banking sector in Japan experienced a substantial organizational change in the early twentieth century, including an expansion of branch networks. In this paper, we explore the implications of branch banking in regional economies, using unique bank branch office-level data for four rural regions: Fukushima, Tottori, Kumamoto, and Miyazaki Prefectures. We find that branch banking had a positive scale effect on lending. However, compared with branch offices of banks headquartered in the same municipality, branch offices of banks headquartered in other municipalities, especially in other prefectures, tended to have a lower propensity to issue loans. In particular, branch offices of banks headquartered in urban areas, such as Osaka and Tokyo, tended to collect deposits rather than to lend money through their branch networks, which restricted regional finance.
    Keywords: branch banking, bank merger, regional economy
    JEL: G2 N2 N9
    Date: 2019–01–16
  6. By: Fred EKA
    Abstract: L’objectif de ce papier est de déterminer l’incidence des flux d’investissement chinois sur le taux de croissance des 49 pays d’ASS sur la période allant de 2003 à 2017. Pour cela, nous avons essayé d’expliquer la dynamique des IDE chinois en ASS en utilisant dans notre modélisation des techniques d’estimation sur données de panel (estimations statique et dynamique). Ces techniques notamment les panels dynamiques permettent de mieux apprécier la nature de la relation entre les variables étudiées. Les résultats montrent que l’IDE chinois a un effet positif mais très faible sur le taux de croissance économique des pays d’ASS car il est très orienté vers les secteurs d’extraction des matières premières (mines, bois et mines…) qui créent moins d’emploi local et ne permettent pas de vrai transfert de technologie, malgré la création de quelques co-entreprises et joint-ventures entre les entreprises chinoises et firmes locales des pays africains.
    Keywords: IDE chinois, PIB par tête, Afrique sub-saharienne, données de panel, MMG
    Date: 2019–02
  7. By: Andersson, Per-Åke (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Sida is exploiting loan guarantee schemes to leverage finance from the private sector in partner countries. This paper is a literature review of the rationale for and experiences of this type of schemes, focusing on Small and Medium Enterprises. Since, credit rationing and moral hazard problems certainly occur in partner countries, loan guarantee schemes could become an important instrument for Sida. Loan guarantee schemes are popular in many countries and the overall experience seems to be positive. Unfortunately, impact evaluations are uncommon. The schemes have positive effects on short-run financial outcome of companies and, in the long run, economic outcomes are more often positive than negative.
    Keywords: Loan guarantee schemes; SMEs; development cooperation
    JEL: F35 G21 G23
    Date: 2019–02
  8. By: Christophe Blot (Observatoire français des conjonctures économiques); Paul Hubert (Observatoire français des conjonctures économiques)
    Abstract: Cet article a pour objectif d'évaluer la contribution de la politique monétaire à l'activité économique depuis 1999 en zone euro, aux États-Unis et Royaume-Uni, ainsi qu'en Allemagne, France, Italie et Espagne. L'estimation des multiplicateurs monétaires indique un effet significatif de la politique monétaire sur le PIB et confirme des délais de transmission assez longs, de l'ordre de plusieurs trimestres. L'effet d'une hausse des taux d'intérêt semble plus important dans la zone euro qu'aux États-Unis et au Royaume-Uni. Il y a cependant une forte hétérogénéité entre les quatre plus grands pays de la zone euro, avec un effet plus important en Espagne et en Italie et plus faible en Allemagne et en France. Nous calculons ensuite la contribution passée et à venir de la politique monétaire à l'activité. Avec la normalisation de la politique entreprise à partir de 2015 aux États-Unis et probablement en 2019 dans la zone euro, le soutien de la politique monétaire devrait s'atténuer et la croissance pourrait être négativement impactée à l'horizon 2020 dans les six économies avancées.
    Keywords: politique monétaire; transmission; multiplicateur monétaire; impulsion monétaire
    Date: 2018

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