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on Financial Development and Growth |
| By: | Justin Yifu Lin (Institute of New Structural Economics, Peking University); Jianjun Miao (Department of Economics, Boston University); Pengfei Wang (Department of Economics, Hong Kong University of Science and Technology) |
| Abstract: | We study the relationship among inflation, economic growth, and financial development in a Schumpeterian overlapping-generations model with credit constraints. In the baseline case money is super-neutral. When the financial development exceeds some critical level, the economy catches up and then converges to the growth rate of the world technology frontier. Otherwise, the economy converges to a poverty trap with a growth rate lower than the frontier and with inflation decreasing with the level of financial development. We then study efficient allocation and identify the sources of inefficiency in a market equilibrium. We show that a particular combination of monetary and fiscal policies can make a market equilibrium attain the efficient allocation. |
| Keywords: | Economic Growth, Innovation, Credit Constraints, Convergence, Policy Analysis, Money, Inflation |
| JEL: | O11 O23 O31 O33 O38 O42 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:bos:iedwpr:dp-307&r=all |
| By: | Kangni Kpodar; Maëlan Le Goff; Raju Jan Singh |
| Abstract: | This paper contributes to the literature by looking at the possible relevance of the structure of the financial system—whether financial intermediation is performed through banks or markets—for macroeconomic volatility, against the backdrop of increased policy attention on strengthening growth resilience. With low-income countries (LICs) being the most vulnerable to large and frequent terms of trade shocks, the paper focuses on a sample of 38 LICs over the period 1978-2012 and finds that banking sector development acts as a shock-absorber in poor countries, dampening the transmission of terms of trade shocks to growth volatility. Expanding the sample to 121 developing countries confirms this result, although this role of shock-absorber fades away as economies grow richer. Stock market development, by contrast, appears neither to be a shock-absorber nor a shock-amplifier for most economies. These findings are consistent across a range of econometric estimators, including fixed effect, system GMM and local projection estimates. |
| Keywords: | Banks, stock markets, terms of trade shocks, growth volatilit. |
| JEL: | F40 G20 O10 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:banfra:719&r=all |
| By: | International Monetary Fund |
| Abstract: | Selected Issues |
| Keywords: | Economic growth;Credit;Development;Interest rates;Interest rates on deposits;FCI,financial variable,deposit rate,percent of GDP,financial condition |
| Date: | 2019–04–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfscr:19/109&r=all |
| By: | Artecona, Raquel; Bisogno, Marcelo; Fleiss, Pablo |
| Abstract: | This paper analyses the role that Multilateral Development Banks (MDBs) have played in financing development in Latin America and the Caribbean (LAC) and what their role will be in support of the Sustainable Development Goals (SDGs). In a context where multilateralism is severely questioned, donor countries are moving their resources away from middle-income countries, and MDBs' lending represents a decreasing share of total debt in the region, we show that there is room for MDBs to continue being relevant players. |
| Keywords: | DESARROLLO ECONOMICO, DESARROLLO SOCIAL, FINANCIACION DEL DESARROLLO, BANCOS DE DESARROLLO, ECONOMIC DEVELOPMENT, SOCIAL DEVELOPMENT, DEVELOPMENT FINANCE, DEVELOPMENT BANKS |
| Date: | 2019–05–16 |
| URL: | http://d.repec.org/n?u=RePEc:ecr:col034:44608&r=all |
| By: | Ekinci, Mehmet Fatih; Omay, Tolga |
| Abstract: | Understanding the impact of financial variables on the current account balance is one of the priorities of academic literature and policy makers. Evidence from a broad panel of countries shows that an increase in the credit growth causes a significant deterioration in the current account balance. We find that this result is driven by household credit. Furthermore, we show that total and household credit growth rates have a stronger negative effect on the current account balance for lower levels of financial depth. In other words, the demand boom associated with the credit expansion gets weaker for higher levels of financial depth. Thus, our findings are in line with the ``too much finance'' hypothesis which states that positive impact of financial development on economic growth vanishes as the level of financial depth increases. Our results suggest that targeted policy measures which curb the excessive household credit growth might be more effective to reduce the external imbalances particularly at the early stages of financial deepening. |
| Keywords: | Credit Growth, Current Account Balance, Global Imbalances and Panel Data |
| JEL: | C33 F3 F32 |
| Date: | 2019–05–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:93882&r=all |
| By: | Sami Ben Naceur; Bertrand Candelon; Quentin Lajaunie |
| Abstract: | This paper assesses whether and how financial development triggers the occurrence of banking crises. It builds on a database that includes financial development as well as financial access, depth and efficiency for almost 100 countries. Through estimation of a dynamic logit panel model, it appears that financial development, from an institutional dimension and to a lesser extent from a market dimension, triggers financial instability within a one- to two-year horizon. Additionally, whereas financial access is destabilizing for advanced countries, it is stabilizing for emerging and low income ones. Both results have important implications for macroprudential policies and financial regulations. |
| Date: | 2019–05–06 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/94&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | This study investigates linkages between the mobile phone, information sharing offices (ISO) and financial sector development in 53 African countries for the period 2004-2011. ISO are private credit bureaus and public credit registries. The empirical evidence is based on contemporary and non-contemporary quantile regressions. Two main hypotheses are tested: mobile phones complement ISO to enhance the formal financial sector (Hypothesis 1) and mobile phones complement ISO to reduce the informal financial sector (Hypothesis 2). The hypotheses are largely confirmed. This research adds to the existing body of literature by engaging hitherto unexplored dimensions of financial sector development and investigating the role of mobile phones in information sharing for financial sector development. |
| Keywords: | Information sharing; Banking sector development; Africa |
| JEL: | G20 G29 L96 O40 O55 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94011&r=all |