nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2019‒08‒26
nine papers chosen by
Georg Man

  1. Financial Reforms and Industrialisation: Evidence from Nigeria By Oludele E. Folarin
  2. The Impact of Remittances on Economic Activity: The Importance of Sectoral Linkages By Hector Perez-Saiz; Jemma Dridi; Tunc Gursoy; Mounir Bari
  3. Rural financial development, spatial spillover and poverty reduction: Evidence from China By Zhu, Xiaoke; Cai, Jinyang; Hu, Ruifa
  4. Diversification des exportations, investissements directs étrangers et croissance économique en Afrique Subsaharienne By NAPO, Fousséni
  5. The Role of Asymmetry and Uncertainties in the Capital Flows- Economic Growth Nexus By Ibrahim D. Raheem; Sara le Roux; Simplice A. Asongu
  6. The impact of Foreign Direct Investment and the institutional quality on Welfare in Latin America and Sub-saharan Africa By Aloui, Zouhaier
  7. Debt shift, financial development and income inequality By Dirk Bezemer; Anna Samarina
  8. Regulation, Financial Crises, and Liberalization Traps By Francesco Marchionne; Beniamino Pisicali; Michele Fratianni
  9. The Mobile Phone, Information Sharing and Financial Sector Development in Africa: A Quantile Regressions Approach By Simplice A. Asongu; Nicholas M. Odhiambo

  1. By: Oludele E. Folarin (University of Ibadan, Ibadan, Nigeria)
    Abstract: Nigeria adopted the Structural Adjustment Programme (SAP) in 1986 after the crash in world oil price in the early 1980s. Financial reforms are part of the reforms implemented during the SAP. Since, industrialisation is seen as an engine of growth, we conduct an empirical assessment of the effects of financial sector reforms on industrialisation in Nigeria using an annual time series data over 1981 - 2015. Using an autoregressive distributed lag (ARDL) model, our findings show that financial reforms have a positive and significant impact on industrialisation.
    Keywords: Financial reforms, Financial repression, Industrialisation, ARDL bounds test
    JEL: C32 E44 O14 O55
    Date: 2019–01
  2. By: Hector Perez-Saiz; Jemma Dridi; Tunc Gursoy; Mounir Bari
    Abstract: We propose a simple macroeconomic model with input-output sectoral linkages based on Acemoglu et al. (2016) to quantify how changes in aggregate demand due to additional income from household’s remittances propagates through the network of input-output linkages in Sub-Saharan African countries. We first propose two network centrality measures to assess the role of some sectors as key input providers in the economy. Then, we use these measures to quantify the effect of sectoral linkages on sectoral and total output following an increase in remittances inflows. Our empirical results suggest that the effects of remittances on recipient economies increase with the degree of linkages across sectors, which is especially prominent in the case of the financial intermediation sector. Our paper contributes to the emerging macroeconomic literature on the propagation of shocks across sectors and the implications for the whole economy.
    Date: 2019–08–16
  3. By: Zhu, Xiaoke; Cai, Jinyang; Hu, Ruifa
    Keywords: Agricultural Finance
    Date: 2019–06–25
  4. By: NAPO, Fousséni
    Abstract: Abstract The objective of this article is to analyse the effects of export diversification and foreign direct investment (FDI) on economic growth. Second, to examine whether foreign direct investment (FDI) can contribute to export diversification. We have adopted a methodology based on the generalized moments method in dynamic panel system over the period 1990-2014 for forty-seven (47) sub-Saharan African countries. The results of our estimates show a positive impact of export diversification on economic growth. This positive impact would be greater through the number of export lines that sub-Saharan African countries will create. On the other hand, the concentration of exports based on raw materials and manufactured value added have a negative impact on GDP per capita growth. This negative effect is due to the concentration of FDI in the raw materials sector. It would therefore make sense for sub-Saharan African countries to diversify FDI in several sectors, which will allow them to create a larger number of potential export lines for growth.
    Keywords: Africa, exports, diversification and natural resources.
    JEL: L25 O13 O55 P33
    Date: 2019–06–08
  5. By: Ibrahim D. Raheem (Liège, Belgium); Sara le Roux (Oxford, UK.); Simplice A. Asongu (Yaoundé, Cameroon)
    Abstract: This study examines the asymmetry between capital flows and economic growth in 42 countries for the period 1990-2017. It further argues that uncertainty is an important channel through which asymmetry operates. As such, the three measures of uncertainty are macroeconomic, fiscal and institutional. The Generalised Method of Moments is used as an empirical strategy. The existence of an asymmetry is confirmed by the findings as capital flows are more reactive to economic drag when compared to economic growth. Furthermore, the channels through which asymmetry operate are heterogeneous to measures of capital flows and proxies for uncertainty.
    Keywords: Capital flows, Economic growth, Asymmetry, Uncertainty and Emerging countries
    JEL: C13 F3 G15 O16
    Date: 2019–08
  6. By: Aloui, Zouhaier
    Abstract: This article examines the impact of foreign direct investment (FDI) and institutional quality on well-being in Latin American and sub-Saharan African countries between 1996-2014. We use as key variables FDI, indicators of institutional quality (control of corruption and the rule of law) and the Human Development Index (HDI) as the main variables. Our analyzes confirm the positive and significant relationship between FDI and well-being in Latin America. Although the rule of law has been established to improve well-being. This result shows that legal variables of institutional quality play an important role in improving well-being. Nevertheless, this relationship between FDI, institutional quality and well-being is significantly different between Latin America and sub-Saharan Africa. So legal indicators create a positive effect on well-being. This study shows that institutional quality indicators attack well-being in the Latin American region. In addition, the quality of institutions and the strengthening of governance tend to amplify the positive effects on well-being in the region. The result of the regression confirms the positive links between FDI, institutional quality and improved well-being. Regarding the impact of FDI and institutional quality on well-being, FDI and the rule of law have more impact on improving well-being in Latin American countries than in sub-Saharan African countries.
    Keywords: Foreign Direct Investment, Institutions, Welfare, Latin America, Sub-Saharan Africa.
    JEL: F21 I31 K23
    Date: 2019–08–09
  7. By: Dirk Bezemer; Anna Samarina
    Abstract: Does financial development increase income inequality? Ambiguous answers to this question may be due to over-aggregation of 'financial development'. In a sample of 40 developed economies over 1990-2013, we study the effects on income inequality of different components of financial development. There was a shift in bank credit allocation, away from supporting investments by non-financial firms and towards financing real estate markets ('debt shift'). In system-GMM estimations, we find that mortgage credit increases income inequality while credit to non-financial business reduces inequality. The effect of business credit is conditional on macroeconomic and labor market factors related to broader income formation, such as wage share, investment, trade openness, and labor force participation. House prices and the size of the real estate sector condition the impact of mortgage credit on income inequality.
    Keywords: income inequality; financial development; debt shift
    JEL: E51 G21 I30
    Date: 2019–08
  8. By: Francesco Marchionne; Beniamino Pisicali; Michele Fratianni
    Abstract: To reconcile the mixed empirical results, we develop a theoretical model whose main implication is a concave impact of regulation on the probability of a crisis. We test this relationship by applying a Probit model of a non-linear specification to annual data from 1999 to 2011 drawn from 132 countries. The probability of a financial crisis fits an inverted U-shaped curve: it rises as regulation stringency moves from low to medium levels and falls from medium to high levels. Countries located at the intermediate level of regulatory stringency face more instability than countries that are either loosely or severely regulated. We identify the latter two groups as falling in “liberalization traps”. Institutional quality interacts significantly with the regulatory environment.
    Keywords: crisis, banks, institutions, liberalization, regulation
    JEL: G01 G21 G28
    Date: 2019
  9. By: Simplice A. Asongu (Yaoundé/Cameroon); Nicholas M. Odhiambo (Pretoria, South Africa)
    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

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