|
on Financial Development and Growth |
| By: | Francesca Vinci; Omar Licandro |
| Abstract: | Data suggests that the level of GDP shifted to a permanently lower trend following the Great Recession for most advanced countries, and researchers have not yet reached a consensus concerning the drivers of this phenomenon. We contribute to this literature by suggesting a DSGE model with financial frictions and endogenous growth through learning-by-doing. With an aggregate AK technology, a negative shock to the capital stock has the effect of moving the economy to a lower trend. A Taylor rule policy designed to reduce the output gap may counterbalance the shock, bringing the economy back to the past trend. However, when the recession is deep and persistent and the ZLB binds, a revision of potential output measures may weaken the recovering role of monetary policy, making the economy converge to a lower trend. We calibrate the model to the U.S. economy and find that GDP can fully recover from a textbook TFP shock under a standard Taylor rule, whilst large demand shocks can affect the supply side permanently. Our framework is thus consistent with episodes of economic recovery as well as episodes of no-recovery. Results rely on the observation that the measurement of U.S. potential output switched track as the Great Recession unfolded, because the severe and prolonged slump put downward pressure on estimates. As a consequence, the output gap closed following the switching-track of potential output, rather than faster GDP growth. |
| Keywords: | Great Recession, Economic Recovery, Endogenous Growth, Hysteresis, Trend Shift, Switching-track |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:not:notcfc:2020/02&r=all |
| By: | Oviedo Moguel Rodolfo |
| Abstract: | In the USA, the share of household wealth held by the richest 1% increased from 23.5% in 1980 to 41.8% in 2012. This paper contributes to understanding the causes behind this increase. First, using an accounting decomposition, I show that more than half of the increase in the share of the top 1% can be attributed to a decrease in the saving rate of the bottom 99%. Second, using a heterogeneous agent model, I show that the decrease in the saving rate of the bottom groups cannot be rationalized by the reduction in the progressively of taxation or changes in the volatility and concentration of labor earnings. Lastly, I introduce a shock to the credit market into the model in the form of loosening the borrowing constraints of the economy. This shock can simultaneously match the increase in wealth concentration and the decrease of the saving rate of the economy. |
| JEL: | D14 D31 D33 E21 E62 G51 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:bdm:wpaper:2020-13&r=all |
| By: | Alexander Mihailov (Department of Economics, University of Reading); Harun Nasir (Department of Economics, Zonguldak Bülent Ecevit University) |
| Abstract: | This paper contributes to the theory of optimal international reserves by extending the Jeanne and Rancière (2011) endowments mall open economy (SOE) model to a SOE with capital and production that explicitly accounts for the main sources of economic growth. A first version of our set-up considers capital as the sole factor of production in the spirit of the AK model of endogenous growth with constant population, implying increasing returns to scale and justified on the grounds of its ability to generate sustained long-run growth, as observed empirically. Under a plausible calibration for typical emerging market countries facing the risk of sudden stops in capital inflows, we find that the optimal ratio of international reserves to output is 1.7%, which is quite lower than that in Jeanne and Rancière (2011), of 9.1%, even if calibrated to the same sample of 34 middle-income countries. A richer version then introduces also labour as a second factor in a conventional labour- augmenting Cobb-Douglas production function with constant returns to scale and exogenous population growth, consistent with a long-run balanced growth path and the sustained per capita income growth in the data. Under this alternative technology and the same calibration, we similarly find that the optimal reserves-to-output ratio for emerging market SOEs decreases - but not as much, being 5.5% - relative to the endowment case. We conclude that our results are explained by the role of capital accumulation as precautionary saving: the accumulated capital stock can potentially be used as a pledge to external creditors in obtaining borrowing, therefore insuring better a SOE against sudden stops. |
| Keywords: | optimal international reserves, small open economies, sudden stops,production technology, capital accumulation, precautionary saving, insurance contracts |
| JEL: | E21 E23 F32 F34 F41 O40 |
| Date: | 2020–12–03 |
| URL: | http://d.repec.org/n?u=RePEc:rdg:emxxdp:em-dp2020-24&r=all |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Hillary C. Ezeaku (Caritas University, Enugu, Nigeria) |
| Abstract: | This study investigates the effects of aid grants on inclusive growth in 37 Sub-Saharan African countries for the period 1984-2018. Grant aid is decomposed into aid grants and technical cooperation grants. Two inclusive growth indicators are used namely: gross domestic product (GDP) per capita growth and unemployment rate. The dynamic panel autoregressive distributed lag (ARDL) approach which is employed comprises three different estimators; the pooled mean group (PMG), mean group (MG), and dynamic fixed effect (DFE). The Hausman diagnostics were used to assess the efficiency and consistency of the estimators. Based on the PMG estimator, our findings show that aid grants and technical cooperation grants exert a positive influence on GDP per capita growth in the long-run. However, while the observed influence of aid grants is found to be significant, technical cooperation grants display insignificant effects. In the short run, however, the PMG estimates show that aid grants and technical cooperation grants have negative and insignificant effects on GDP per capita growth. On the other hand, results based the DFE estimators reveal that neither of the aid grants has influenced the unemployment rate positively in the short-run. However, whereas aid grants contribute significantly to the reduction of the unemployment rate in the long run, technical cooperation grants do not. This study complements the attendant literature by assessing how aid grants versus technical cooperation grants affect inclusive growth. The findings are relevant to international policy coordination for the attainment of sustainable development goals. |
| Keywords: | Aid grants, Technical Cooperation grants, Inclusive growth |
| JEL: | B20 F35 F50 O10 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/091&r=all |
| By: | Abhishek Kumar; Sushanta Mallick; Kunal Sen |
| Abstract: | Resource mobilization continues to be an important policy challenge for developing economies, raising questions as to what determines differences in saving behaviour across countries. Using a panel of 47 economies with at least 40 years of continuous time series data, we causally identify, using a range of approaches, that higher productivity growth leads to greater savings, thereby contributing to higher investment. |
| Keywords: | Saving, Productivity, Growth, trends, shocks |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2020-155&r=all |
| By: | Junhong Yang,; Alessandra Guariglia; Yuchao Peng; Yukun Shi |
| Abstract: | Using a panel of 224,604 Chinese firms over the period 2004-2009, together with a set of unique city-level financial development data, we document a positive and significant association between both bank loans and trade credit and inventory investment. Furthermore, we find that in cities with relatively high (low) financial development, firms rely more on bank loans (trade credit) to finance their inventory investment. Finally, we show that the moderating effect played by financial development on the association between bank loans/trade credit and inventory investment is more pronounced for firms more likely to face financing constraints, namely privately-owned, small firms, with no political connections, located in coastal regions. Our results are robust to using a variety of different specifications and estimation methods. |
| Keywords: | Financing choice, Trade credit, Bank loans, Inventories, Financial development, Financing constraints |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:not:notgep:2020-14&r=all |
| By: | van Buggenum, Hugo (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management) |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:7db639bc-8d7d-4a3c-8034-a77d19b588b4&r=all |
| By: | Engelbert Stockhammer (None) |
| Abstract: | Since the global financial crisis and the ensuing weak growth interest in macroeconomic issues has grown within Comparative Political Economy (CPE). The dominant Varieties of Capitalism approach focuses on how different institutional arrangements contribute to competitiveness and thus has a strong supply-side focus, which is complementary with modern mainstream economics. Baccaro and Pontusson (2016) have suggested basing CPE on post-Keynesian theory of distribution and growth. This paper generalises their point and makes a systematic case for post-Keynesian (PK) foundations for CPE. It highlights the PK theory of money and finance and that PKE analyses inequality as well as financial relations as based on class and power relations. The paper identifies the analysis of financialisation, financial cycles, the understanding of neoliberal growth models and the political economy of central banks as areas where PKE can provide specific insights for CPE. |
| Keywords: | post-Keynesian economics, comparative political economy, growth models, financial instability |
| JEL: | E02 E12 P50 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:pke:wpaper:pkwp2022&r=all |
| By: | Òscar Jordà (Federal Reserve Bank of San Francisco; and Department of Economics, University of California, Davis); Martin Kornejew (Department of Economics, University of Bonn); Moritz Schularick (Federal Reserve Bank of New York; and Department of Economics, University of Bonn; and CEPR); Alan M. Taylor (Department of Economics and Graduate School of Management, University of California, Davis; NBER; and CEPR) |
| Abstract: | With business leverage at record levels, the effects of corporate debt overhang on growth and investment have become a prominent concern. In this paper, we study the effects of corporate debt overhang based on long-run cross-country data covering the nearuniverse of modern business cycles. We show that business credit booms typically do not leave a lasting imprint on the macroeconomy. Quantile local projections indicate that business credit booms do not affect the economy’s tail risks either. Yet in line with theory, we find that the economic costs of corporate debt booms rise when inefficient debt restructuring and liquidation impede the resolution of corporate financial distress and make it more likely that corporate zombies creep along. |
| Keywords: | corporate debt, business cycles, local projections |
| JEL: | E44 G32 G33 N20 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:ajk:ajkdps:042&r=all |
| By: | Cecilia Dassatti (Banco Central del Uruguay); Francesc Rodriguez-Tous (Cass Business School); Rodrigo Lluberas (Banco Central del Uruguay) |
| Abstract: | Banks' incentives to implement a policy of forbearance in order to avoid increasing their loan loss reserves leads to loan “evergreening”, through which a bank grants additional credit to a troubled firm. Exploiting granular data of all corporate loans from the Credit Registry in Uruguay, we identify banks' zombie lending strategies. While most papers on zombie lending focus on firms that display low levels of profitability, low productivity or that receive subsidized loans, we analyze zombie lending strategies by looking at changes in loans' repayment schedules granted by banks to firms. This allows us to actually observe the implementation of a zombie lending strategy, instead of inferring it through firms' balance-sheet indicators. After identifying and characterizing zombie lending, we study its effects on credit growth, finding a positive and statistically significant relationship between credit growth and zombie lending. |
| Keywords: | banks, credit, loan evergreening, regulatory arbitrage, zombie lending |
| JEL: | G21 G28 E44 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:bku:doctra:2020003&r=all |
| By: | Rieder, Kilian |
| Abstract: | I estimate the comparative causal effects of monetary policy \leaning against the wind" (LAW) and macroprudential policy on bank-level lending and leverage by drawing on a single natural experiment. In 1920, when U.S. monetary policy was still decentralized, four Federal Reserve Banks implemented a conventional rate hike to address financial stability concerns. Another four Reserve Banks resorted to macroprudential policy with the same goal. Using sharp geographic regression discontinuities, I exploit the resulting policy borders with the remaining four Federal Reserve districts which did not change policy stance. Macroprudential policy caused both bank-level lending and leverage to fall significantly (by 11%-14%), whereas LAW had only weak and, in some areas, even perverse effects on these bank-level outcomes. I show that the macroprudential tool reined in over-extended banks more effectively than LAW because it allowed Federal Reserve Banks to use price discrimination when lending to highly leveraged counterparties. The perverse effects of the rate hike in some areas ensued because LAW lifted a pre-existing credit supply friction by incentivizing regulatory arbitrage. My results highlight the importance of context, design and financial infrastructure for the effectiveness of financial stability policies. JEL Classification: E44, E51, E52, E58, G21, N12, N22 |
| Keywords: | bank lending, credit boom, Federal Reserve System, financial crisis, leaning against the wind, leverage, macroprudential policy, monetary policy, progressive discount rate, recession of 1920/1921 |
| Date: | 2020–12 |
| URL: | http://d.repec.org/n?u=RePEc:srk:srkwps:2020113&r=all |
| By: | Huizinga, Harry (Tilburg University, School of Economics and Management); Laeven, Luc (Tilburg University, School of Economics and Management) |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:afe88ae8-3e11-45d4-a1f4-fa1a2cfcc4b4&r=all |
| By: | Mikel Bedayo (Banco de España); Gabriel Jiménez (Banco de España); José-Luis Peydró (Imperial College London, ICREA-Universitat Pompeu Fabra-CREI-Barcelona GSE, and CEPR); Raquel Vegas (Banco de España) |
| Abstract: | We show that loan origination time is key for bank lending standards, cycles, defaults and failures. We exploit the credit register from Spain, with the time of a loan application and its granting. When VIX is lower (booms), banks shorten loan origination time, especially to riskier firms. Bank incentives (capital and competition), capacity constraints, and borrower-lender information asymmetries are key mechanisms driving results. Moreover, shorter (loan-level) origination time is associated with higher ex-post defaults, also using variation from holidays. Finally, shorter precrisis origination time —more than other lending conditions— is associated with more bank-level failures in crises, consistent with lower screening. |
| Keywords: | loan origination time, lending standards, credit cycles, defaults, bank failures, screening |
| JEL: | G01 G21 G28 E44 E51 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:bde:wpaper:2037&r=all |
| By: | Nijskens, Rob (Tilburg University, School of Economics and Management); Mokas, Dimitris |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:ea4f2f0e-dc50-4987-91d3-67686ea75a66&r=all |
| By: | Gabor Katay (European Commission – JRC); Lisa Kerdelhué (Banque de France, Aix-Marseille Université); Matthieu Lequien (Institut National de la Statistique et des Études Économiques (INSEE), Paris School of Economics) |
| Abstract: | The paper assesses the impact of adding information on financial cycles on the output gap estimates for eight advanced economies using two unobserved components models: a reduced form extended Hodrick-Prescott filter, and a standard semi-structural unobserved components model. To complement these models, a semi-structural vector autoregression model is proposed in which only supply shocks are identified. The accuracy of the output gap estimates is assessed based on their performance in predicting recessions. The models with financial variables generally produce more accurate output gap estimates at the expense of increased real-time volatility. While the extended Hodrick-Prescott filter is particularly appealing for its real-time stability, it lags behind the two semi-structural models in terms of forecasting performance. The vector autoregression model augmented with financial variables features the best in-sample forecasting performance, and it has similar real-time prediction capabilities to the semi-structural unobserved components model. Overall, financial cycles appear to be relevant in Japan, Spain, the UK, and – to a lesser extent – in the US and in France, while they are relatively muted in Canada, Germany, and Italy. |
| Keywords: | unobserved components model, semi-structural VAR, output gap, financial cycle, sustainable growth, credit, house prices, advanced economies |
| JEL: | C32 E32 E44 G01 O11 O16 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:jrs:wpaper:202011&r=all |
| By: | Herwartz, Helmut; Ochsner, Christian; Rohloff, Hannes |
| Abstract: | We conceptualize global liquidity as global monetary policy and credit components by means of a large-scale dynamic factor model in the spirit of Eickmeier,Gambacorta, and Hofmann (2014). Going beyond previous work, we decompose aggregate credit components into credit supply and demand flows directed at the public (governments) and private sector (businesses and households). We show that this decomposition enhances the understanding of global liquidity considerably. Whereas global public sector credit supply is best understood as a safe-haven lending factor from an investors perspective, lenders supply the private sector with credit to maximize profits along the business cycle. Moreover, the public sector demands credit in times of bust-episodes, whereas private entities demand credit in times of booms. In particular, we find that our global credit estimates explain substantial variance shares of a large panel of international financial aggregates. |
| Keywords: | global liquidity,credit composition,financial cycle,dynamic factor model |
| JEL: | C32 C38 E32 E44 E51 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:cegedp:409&r=all |
| By: | Baah A. Kusi (University of Ghana Business School, Ghana); Elikplimi K. Agbloyor (University of Ghana Business School, Ghana); Agyapomaa Gyeke-Dako (University of Ghana Business School, Ghana); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | The study investigates how financial sector transparency moderates the influence of financial crises on bank market power across seventy-five economies between 2004 and 2014. Employing two-step dynamic system generalized method of moments the study shows that while public sector-led financial sector transparency reduces bank market power, private sector-led financial sector transparency promotes bank market power given that private sector-led transparency gives financial cost advantage to financially sound banks to solidify the market power and dominance. Similarly, while financial crises reduce the market power of banks implying that during financial crises banks lose their market power, financial sector transparency promotes the negative effect of financial crises on bank market power. This implies that during financial crises, financial sector transparency whether enforced through private or public sector, boosts the weakening effect of financial crises on bank market power. These findings imply that regulators can rely on financial transparency to tame bank market power to enhance banking competitiveness. The findings and results are consistent even when country, time and continental effects are controlled for. |
| Keywords: | Market Power; Bank; Financial Sector Transparency; Private Sector; Public Sector |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/087&r=all |
| By: | van Dijk, Mathijs; van Dalen, Harry (Tilburg University, School of Economics and Management); Hyde, Martin |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:3874c7cc-7e0c-4471-b73c-28fe5111abb9&r=all |
| By: | Oasis Kodila-Tedika (Kinshasa, DRC); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | We assess the correlations between tribalism and financial development in 60 countries using data averages from 2000-2010. The tribalism index is used to measure tribalism whereas financial development is measured from perspectives of financial intermediary and stock market developments. The long term finance variable is stock market capitalisation while the short run variable is private and domestic credit. We find that tribalism is negatively correlated with financial development and the magnitude of negativity is higher for financial intermediary development relative to stock market development. The findings are particularly relevant to African and Middle Eastern countries where the scourge of tribalism is most pronounced. |
| Keywords: | Tribalism; Financial Development |
| JEL: | E62 H11 H20 G20 O43 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/092&r=all |
| By: | World Bank |
| Keywords: | Finance and Financial Sector Development - Finance and Development Finance and Financial Sector Development - Insurance & Risk Mitigation International Economics and Trade - Access to Markets |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:34132&r=all |
| By: | World Bank |
| Keywords: | Agriculture - Agricultural Sector Economics Agriculture - Commodity Risk Management Finance and Financial Sector Development - Access to Finance Finance and Financial Sector Development - Insurance & Risk Mitigation Finance and Financial Sector Development - Microfinance Rural Development - Rural Microfinance and SMEs |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:34100&r=all |
| By: | World Bank |
| Keywords: | Agriculture - Agribusiness Agriculture - Agricultural Sector Economics Agriculture - Commodity Risk Management Finance and Financial Sector Development - Insurance & Risk Mitigation Rural Development - Agribusiness & Markets Rural Development - Rural Microfinance and SMEs |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:34195&r=all |
| By: | World Bank Group |
| Keywords: | Environment - Carbon Policy and Trading Environment - Climate Change Mitigation and Green House Gases Environment - Environmental Economics & Policies Finance and Financial Sector Development - Finance and Development Macroeconomics and Economic Growth - Climate Change Economics |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:33917&r=all |
| By: | Jip Leendertse; Mirella T. Schrijvers; Erik Stam; ; |
| Abstract: | In spite of the popularity of the entrepreneurial ecosystem approach in science and policy, there is a scarcity of credible, accurate and comparable metrics of entrepreneurial ecosystems. This is a severe shortcoming for both scientific progress and successful policy. In this paper, we bridge this metrics gap. We use the entrepreneurial ecosystem approach to quantify and qualify regional economies. Entrepreneurial ecosystems consist of the actors and factors that enable entrepreneurship. We operationalize the elements and outputs of entrepreneurial ecosystems for 273 European regions. The ecosystem elements show strong and positive correlations between them, confirming the systemic nature of entrepreneurial economies, and the need for a complex systems perspective. Our analyses show that physical infrastructure, finance, formal institutions, and talent take a central position in the interdependence web, providing a first indication of these elements as fundamental conditions of entrepreneurial ecosystems. The measures of the elements are used to calculate an index to approximate the quality of entrepreneurial ecosystems. This index is robust and performs well in regressions to predict entrepreneurial output, which we measure with novel data on productive entrepreneurship. The entrepreneurial ecosystem approach and the metrics we present provide a lens for public policy to better diagnose, understand and improve entrepreneurial economies. |
| Keywords: | entrepreneurial ecosystem; regional dynamics; entrepreneurship; economic development; economic policy; entrepreneurship policy |
| JEL: | D2 E02 L26 M13 O43 P00 R1 R58 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:2056&r=all |
| By: | Dalton, Patricio (Tilburg University, School of Economics and Management); Pamuk, H. (Tilburg University, School of Economics and Management); Ramrattan, R.; van Soest, Daan (Tilburg University, School of Economics and Management); Uras, Burak (Tilburg University, School of Economics and Management) |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:tiu:tiutis:98cf0741-8e78-4bba-a270-4b1ee857cd39&r=all |
| By: | Helke Seitz |
| Abstract: | This study examines the effect of a soft commitment device in the form of a savings goal calendar on savings for small business owners in Kampala, Uganda. We run a randomized controlled trial (RCT) under which the treatment group receives a calendar designed to set savings goals and to make a plan to reach this goal. The control group is given a plain calendar. We find no average effect on savings, but show that present-biased individuals save more when given the calendar. Further examinations indicate that present-biased individuals are more likely to use the calendar, suggesting that, in line with theory, present-biased individuals have a demand. |
| Keywords: | Entrepreneurship, investment, credit constraints, savings constraints, managerial constraints |
| JEL: | D22 D25 O12 O16 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1920&r=all |
| By: | Dyotona Dasgupta (Center for Development Economics, Delhi School of Economics); Prabal Roy Chowdhury (Indian Statistical Institute, Delhi) |
| Abstract: | This paper studies dynamic incentives provided by the microfinance institutions (MFIs) to ensure repayment. MFIs provide collateral-free loans, and yet observe near perfect repayment rate. In this paper, we provide an explanation of two widely practised mechanisms by MFIs – progressive lending i.e. increasing loan size over time and deposit collection. In our model, the MFI provides both credit and savings services. These help a strategic, poor borrower to accumulate a lumpsum amount and “graduate†to an improved lifetime utility which is not achievable when only credit is provided. These savings also act as an incentive device for repayment. We find that the optimal loan scheme is weakly progressive. It is “progressive with a cap†when the increase in utility from graduation is “modestly positive†. Further, we show that, since the MFI is benevolent, an improvement in the borrower’s outside option lengthens the time required to graduate which in turn reduces her welfare. |
| Keywords: | dynamic incentives, progressive lending, deposit collection, collateral substitute, graduation |
| JEL: | O12 O16 D86 G21 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:alo:isipdp:20-09&r=all |
| By: | Simplice A. Asongu (Yaounde, Cameroon); Rexon T. Nting (University of Wales, London, UK) |
| Abstract: | The study has investigated the comparative importance of financial access in promoting gender inclusion in African countries. Gender inclusion is proxied by the female labour participation rate while financial channels include: financial system deposits and private domestic credit. The empirical evidence is based on non-contemporary Fixed Effects regressions. In order to provide more implications on comparative relevance, the dataset is categorised into income levels (middle income versus (vs.) low income); legal origins (French civil law vs. English common law); religious domination (Islam vs. Christianity); openness to sea (coastal vs. landlocked); resource-wealth (oil-poor vs. oil-rich) and political stability (stable vs. unstable). Six main hypotheses are tested, notably, that middle income, English common law, Christianity, coastal, oil-rich and stable countries enjoy better levels of “financial access†-induced gender inclusion compared to respectively, low income, French civil law, Islam, landlocked, oil-poor and unstable countries. All six tested hypothesis are validated. This is the first study on the comparative importance of financial access in gender economic participation. |
| Keywords: | Inequality; Gender Inclusion; Financial development; Africa |
| JEL: | I30 L96 O16 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:20/089&r=all |
| By: | Guérin, Isabelle (IRD); Nordman, Christophe Jalil (IRD, DIAL, Paris-Dauphine); Reboul, Elena (IRD) |
| Abstract: | The champions of financial inclusion regret women’s lack of access to credit, while critics of financialization, by contrast, claim that women have become overly indebted. But little is actually known about women’s debt/credit in quantitative terms, mostly due to a lack of data. This descriptive paper uses first-hand survey data from southern India disaggregated by sex in order to analyze the gender of debt and its interplay with caste and poverty, based on descriptive statistics and econometric results. We show that women are heavily indebted, first and foremost to informal sources, alongside microcredit. While men are much higher earners, they borrow much less in relative terms. Furthermore, women prominently - and markedly more so than men - borrow in order to make ends meet; productive investment largely remains a male practice. Lastly, women of the poorest and lowest-caste households have the heaviest borrowing responsibilities, managing the highest proportions of household debt. On a theoretical level, these results highlight the gendered earmarking of debt and credit: male and female debts/credits do not have the same meanings and uses. They also confirm the gendered dimension of behavior, in as much as women's behavior is constrained by family affiliation, poverty level and caste, all of which affects men much less. Last, in terms of policy implications, these results put into question the specific targeting of women by microcredit policies, likely to strengthen the association between debt and poverty for women, and in particular to exacerbate female responsibilities for managing scarcity. |
| Keywords: | gender, debt, poverty, caste, microcredit, India |
| JEL: | G51 O16 J16 D14 |
| Date: | 2020–11 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp13891&r=all |
| By: | Ozili, Peterson K |
| Abstract: | This paper examines digital finance usage in the UK, US, India and Nigeria. Using data from the global financial development indicators, the findings reveal that the UK and US have higher digital finance usage than India and Nigeria. The US has higher credit card usage compared to the UK while the UK has higher debit card usage compared to the US. Also, Nigeria has higher debit card usage than India. The findings also show that higher debit card usage is correlated with higher domestic credit to the private sector in the US and Nigeria. Higher credit card usage is correlated with lower domestic credit to the private sector, lower private credit by deposit money banks, and fewer remittances to the UK. The implication of the findings is that policy makers in developing countries should develop the digital finance and payment systems in their countries to close up the wide gap in digital finance adoption between developing and developed countries. |
| Keywords: | Fintech; Digital finance; Credit card; Debit card; Payment system; Digital financial services, financial technology, financial institutions. |
| JEL: | G21 O31 O33 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:104498&r=all |
| By: | Margarete Biallas; Felicity O'Neill |
| Keywords: | Finance and Financial Sector Development - Access to Finance Finance and Financial Sector Development - Financial Structures Finance and Financial Sector Development - International Financial Markets Information and Communication Technologies - ICT Applications International Economics and Trade - Trade Finance and Investment Private Sector Development - Emerging Markets |
| Date: | 2020–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:34305&r=all |