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on Financial Development and Growth |
| By: | Francesco Manaresi; Nicola Pierri |
| Abstract: | We study the impact of bank credit on firm productivity. We exploit a matched firm-bank database covering all the credit relationships of Italian corporations, together with a natural experiment, to measure idiosyncratic supply-side shocks to credit availability and to estimate a production model augmented with financial frictions. We find that a contraction in credit supply causes a reduction of firm TFP growth and also harms IT-adoption, innovation, exporting, and adoption of superior management practices, while a credit expansion has limited impact. Quantitatively, the credit contraction between 2007 and 2009 accounts for about a quarter of observed the decline in TFP. |
| Date: | 2019–05–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:19/107&r=all |
| By: | Sangyup Choi (Yonsei University); Davide Furceri (IMF); Prakash Loungani (IMF) |
| Abstract: | Central bankers often assert that anchoring of inflation expectations and reducing inflation uncertainty are good for economic outcomes. We test this claim and search for a relevant channel using panel data on sectoral growth for 22 manufacturing industries from 36 advanced and emerging market economies over the period 1990-2014. Our difference-in-difference strategy is based on the theoretical prediction that inflation uncertainty has larger effects in industries that are more credit constrained by increasing effective real borrowing costs. The results show that industries characterized by high external financial dependence, low asset tangibility, and high R&D intensity tend to grow faster in countries with well-anchored inflation expectations. The results are robust to controlling for the interaction between these characteristics and a broad set of macroeconomic variables over the sample period, including the level of inflation and output volatility. The results are also robust to IV techniques, using indicators of monetary policy transparency and independence as instruments. |
| Keywords: | industry-level growth; inflation anchoring; inflation uncertainty; long-run growth; credit constraints. |
| JEL: | E52 E63 O11 O43 O47 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:yon:wpaper:2019rwp-143&r=all |
| By: | Lucian Liviu ALBU (Institute for Economic Forecasting, Romanian Academy) |
| Abstract: | The empirical study is based on 138 countries (and territories) for which there are available comparable data regarding FDI at UNCTAD, FDI/MNE database (www.unctad.org/fdistatistics) for 2000-2017. In order to analyse the relations between FDI and GDP per capita and the socalled Real Convergence, usually evaluated only based on expressing GDP per capita in international dollars PPP (Purchasing Power Parity), data for the global economy (represented by the group of 138 countries and territories, as W138), are for the period 2000-2018 from World Bank, and for the period up to 2024 from IMFforecast (IMF Report,April 2019). |
| Keywords: | FDI, convergence, growth |
| JEL: | C50 F43 O11 O50 |
| Date: | 2019–06 |
| URL: | http://d.repec.org/n?u=RePEc:rjr:wpiecf:190612&r=all |
| By: | Waknis, Parag |
| Abstract: | A surprise demonetization, where certain or all denominations of currency notes cease to be legal tender on a short notice, can be understood as a severe payment system shock requiring agents to immediately shift to alternative payment mechanisms. I use a short-term macroeconomic model based on Willamson (2009) featuring goods and financial market segmentation to analyze the effect of such a shock in an economy with substantial informality and cash dependence. The quantitative characterization of the equilibrium dynamics using a deterministic example shows significant level as well as redistributive effects in the very short run. The households with access to formal financial markets experience an increase in consumption and those without such access experience a decline. Most of these effects come from differential access to formal financial markets as a consumption smoothing mechanism. |
| Keywords: | demonetization, segmented markets, payments systems |
| JEL: | E26 E42 E52 |
| Date: | 2019–05–28 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:94171&r=all |
| By: | Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa) |
| Abstract: | This study assesses human development thresholds at which mobile banking mitigates poverty and inequality in 93 developing countries for the year 2011. Mobile banking entails: ‘mobile used to pay bills’ and ‘mobile used to receive/send money’, while the modifying policy indicator is the human development index (HDI). The empirical evidence is based on interactive quantile regressions. A summary of the findings shows that with increasing human development: (i) ‘mobiles used to pay bills’ contribute to reducing inequality in countries at the bottom and top ends of the inequality distribution, while (ii) ‘mobiles used to receive/send money’ have an appealing role in promoting inclusive development in all poverty distributions, with the exception of the top-end or 90th decile. The modifying thresholds of the HDI vary from 0.542 to 0.632 and 0.333 to 0.705 in inequality and poverty specifications, respectively. The relevance of the findings is discussed in light of the current transition from Millennium Development Goals to Sustainable Development Goals. |
| Keywords: | Mobile banking, Quality of growth, poverty, inequality |
| JEL: | G20 O40 I10 I20 I32 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:18/022&r=all |
| By: | Ibrahim Yarba; Zehra Nuray Guner |
| Abstract: | This study analyses leverage dynamics of Turkish non-financial firms over the last 20 years using a confidential and unique firm-level dataset. Results of dynamic panel estimations reveal that financial development fosters corporate leverage while government indebtedness inhibits it. Both impacts are more pronounced for private firms rather than public firms. Besides, even though improvements in financial development foster long-term debt usage for both SMEs and large firms, this impact seems stronger for SMEs. Conspicuously, results reveal that SMEs suffer much more than large firms in crowding-out periods of government leverage while both SMEs and large firms benefit in crowding-in periods. Moreover, higher business risk hinders corporate leverage of private firms and SMEs, which is not the case for either large firms or public firms. Results are robust to alternative firm size classification schemes and alternative model specifications. |
| Keywords: | Leverage dynamics, Financial development, Government leverage, Capital structure, Dynamic panel regression |
| JEL: | G31 G38 H32 O16 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tcb:wpaper:1915&r=all |
| By: | Vanessa S. Tchamyou (University of Antwerp, Belgium) |
| Abstract: | This study investigates the role of financial access in modulating the effect of education and lifelong learning on inequality in 48 African countries for the period 1996 to 2014. Lifelong learning is conceived and measured as the combined knowledge gained from primary through tertiary education while the three educational indicators are: primary school enrolment; secondary school enrolment and tertiary school enrolment. Financial development dynamics are measured with financial system deposits (liquid liabilities), financial system activity (credit) and financial system efficiency (deposits/credit). Three measures of inequality are employed notably: the Gini coefficient; the Atkinson index and the Palma ratio. The estimation strategy is based on Generalised Method of Moments. The following findings are established. First, primary school enrolment interacts with all financial channels to exert negative effects on the Gini index. Second, lifelong learning has negative net effects on the Gini index through financial deposit and efficiency channels. Third, for the most part, the other educational levels do not significantly influence inequality through financial access channels. Policy implications are discussed. |
| Keywords: | Education; Lifelong Learning; Inequality; Financial development; Africa |
| JEL: | I28 I20 I30 O16 O55 |
| Date: | 2018–01 |
| URL: | http://d.repec.org/n?u=RePEc:abh:wpaper:18/003&r=all |