nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2021‒02‒01
twenty-six papers chosen by
Georg Man

  1. The role of finance in inclusive human development in Africa revisited By Simplice A. Asongu; Rexon T. Nting
  2. Liquidity Choice and Misallocation of Credit By Ehsan Ebrahimy
  3. Transitional Dynamics of the Savings Rate and Economic Growth By Markus Brueckner; Tomoo Kikuchi; George Vachadze
  4. Macroprudential Policies, Economic Growth, and Banking Crises By Mohamed Belkhir; Sami Ben Naceur; Bertrand Candelon; Jean-Charles Wijnandts
  5. Effects of Macroprudential Policy: Evidence from Over 6,000 Estimates By Juliana Dutra Araujo; Manasa Patnam; Adina Popescu; Fabian Valencia; Weijia Yao
  6. Drivers of Financial Access: the Role of Macroprudential Policies By Corinne Deléchat; Lama Kiyasseh; Margaux MacDonald; Rui Xu
  7. Moving Minds and Money: The Political Economy of Migrant Transfers By Martina Metzger; Jennifer Pédussel Wu
  8. Do Remittances Enhance Financial Inclusion in LMICs and in Fragile States? By Sami Ben Naceur; Ralph Chami; Mohamed Trabelsi
  9. Institutions, Financial Development, and Small Business Survival: Evidence from European Emerging Markets By Iwasaki, Ichiro; Kočenda, Evžen; Shida, Yoshisada
  10. Macro-Structural Obstacles to Firm Performance: Evidence from 2,640 Firms in Nigeria By Amr Hosny
  11. Credit Frictions in the Great Recession By Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
  12. Search for Profits and Business Fluctuations: How Banks' Behaviour Explain Cycles? By Emanuele Ciola; Edoardo Gaffeo; Mauro Gallegati
  13. Financial Conditions and Growth at Risk in the ECCU By Takuji Komatsuzaki; Steve Brito
  14. Mauritius; Selected Issues By International Monetary Fund
  15. Nonlinearities and the Determinants of Inequality: New Panel Evidence By Antonio Francesco Gravina
  16. Foreign Direct Investment in Emerging Markets: Evidence from Russia since the 2000s By Mahir Suleymanov
  17. Analyzing Effective Factors of Capital Outflow from the Middle East and North African Countries (MENA) By Heydari, Hassan; Jariani, Farzaneh
  18. When and how China’s real exchange rate affects African industry? By Sylviane Guillaumont Jeanneney; Ping Hua
  19. Political stability and economic growth: the role of exchange rate regime By Hadj Fraj, Salma; bouchoucha, Najeh; Maktouf, Samir
  20. World Interest Rates and Macroeconomic Adjustments in Developing Commodity Producing Countries By Vincent Bodart; François Courtoy; Erica Perego
  21. Coordination des Politiques Monétaires et Croissance Economique en RDC: Rôle de la Gouvernance By Kaninda, Aristote
  22. Informality, Frictions, and Macroprudential Policy By Moez Ben Hassine; Nooman Rebei
  23. Designing Central Bank Digital Currencies By Itai Agur; Anil Ari; Giovanni Dell'Ariccia
  24. On the Determinants of Life and Non-Life Insurance Premiums By Martin Hodula; Jan Janku; Martin Casta; Adam Kucera
  25. Development and similarity of insurance markets of European Union countries after the enlargement in 2004 By Anna Denkowska; Stanis{\l}aw Wanat
  26. The impact of Climate on Economic and Financial Cycles: A Markov-switching Panel Approach By Monica Billio; Roberto Casarin; Enrica De Cian; Malcolm Mistry; Anthony Osuntuyi

  1. By: Simplice A. Asongu (Yaounde, Cameroon); Rexon T. Nting (University of Wales, London, UK)
    Abstract: This study investigates direct and indirect linkages between financial development and inclusive human development in data panels for African countries. It employs a battery of estimation techniques, notably: Two-Stage Least Squares, Fixed Effects, Generalized Method of Moments and Tobit regressions. The dependent variable is the inequality adjusted human development index. All dimensions of the Financial Development and Structure Database (FDSD) of the World Bank are considered. The main finding is that financial dynamics of depth, activity and size improve inclusive human development, whereas the inability of banks to transform mobilized deposits into credit for financial access negatively affects inclusive human development. Policies should be tailored to improve mechanisms by which credit facilities can be provided to both households and business operators. Surplus liquidity issues resulting from the inability of banks to transform mobilized deposits into credit can be resolved by enhancing the introduction of information sharing offices (like public credit registries and private credit bureaus) that would reduce information asymmetry between lenders and borrowers. This study complements the extant literature by assessing the nexus between financial development and inclusive human development in Africa.
    Keywords: Banking; human development; Africa
    JEL: E00 G20 I00 O10
    Date: 2021–01
  2. By: Ehsan Ebrahimy
    Abstract: This paper studies a novel type of misallocation of credit between investments of varying liquidity. One type of investment is more liquid, i.e., its return is more pledgeable, and the other is more productive. Low liquidities of both investment types imply that the allocation of credit is constrained inefficient and that there is overinvestment in the liquid type. Constrained inefficient equilibria feature non-positive, i.e., one less than or equal the economy’s growth rate, and yet too high interest rate, too much investment and too little consumption. Financial development can reduce long-term welfare and output in a constrained inefficient equilibrium if it raises the liquidity of the liquid type. I show a maximum liquid asset ratio or a simple debt tax can achieve constrained efficiency. Introducing government bonds can make Pareto improvement whenever it does not raise the interest rate.
    Keywords: Self-employment;Liquidity;Sovereign bonds;Financial sector development;Credit;WP,Pareto efficiency,open economy,credit market
    Date: 2019–12–20
  3. By: Markus Brueckner; Tomoo Kikuchi; George Vachadze
    Abstract: We estimate the relationship between GDP per capita growth and the growth rate of the national savings rate using a panel of 130 countries over the period 1960-2017. We find that GDP per capita growth increases (decreases) the growth rate of the national savings rate in poor countries (rich countries), and a higher credit-to-GDP ratio decreases the national savings rate as well as the income elasticity of the national savings rate. We develop a model with a credit constraint to explain the growth-saving relationship by the saving behavior of entrepreneurs at both the intensive and extensive margins. We further present supporting evidence for our theoretical findings by utilizing cross-country time series data of the number of new businesses registered and the corporate savings rate.
    Date: 2020–12
  4. By: Mohamed Belkhir; Sami Ben Naceur; Bertrand Candelon; Jean-Charles Wijnandts
    Abstract: Using a sample that covers more than 100 countries over the 2000-2017 period, we assess the impact of macroprudential policies on financial stability. In particular, we examine whether the activation of macroprudential policies is conducive to a lower incidence of systemic banking crises. Our empirical setup is designed to account for the potential direct and indirect effects that macroprudential policies can have on banking crises. We find that while macro-prudential policies exert a direct stabilizing effect, they also have an indirect destabilizing effect, which works through the depressing of economic growth. A Generalized Impulse Response Function analysis of a dynamic system composed of the probability of a banking crisis and economic growth reveals, however, that macroprudential policies have a positive net effect on financial stability (lower likelihood of systemic banking crises).
    Keywords: Macroprudential policy;Systemic crises;Banking crises;Emerging and frontier financial markets;Financial crises;WP,policy,policy tightening
    Date: 2020–05–22
  5. By: Juliana Dutra Araujo; Manasa Patnam; Adina Popescu; Fabian Valencia; Weijia Yao
    Abstract: This paper builds a novel database on the effects of macroprudential policy drawing from 58 empirical studies, comprising over 6,000 results on a wide range of instruments and outcome variables. It encompasses information on statistical significance, standardized magnitudes, and other characteristics of the estimates. Using meta-analysis techniques, the paper estimates average effects to find i) statistically significant effects on credit, but with considerable heterogeneity across instruments; ii) weaker and more imprecise effects on house prices; iii) quantitatively stronger effects in emerging markets and among studies using micro-level data; and iii) statistically significant evidence of leakages and spillovers. Other findings include relatively stronger impacts for tightening than loosening actions and negative effects on economic activity in the near term.
    Keywords: Macroprudential policy;Macroprudential policy instruments;Credit;Consumer credit;Housing prices;WP,standard error
    Date: 2020–05–22
  6. By: Corinne Deléchat; Lama Kiyasseh; Margaux MacDonald; Rui Xu
    Abstract: This study analyzes the drivers of the use of formal vs. informal financial services in emerging and developing countries using the 2017 Global FINDEX data. In particular, we investigate whether individuals’ choice of financial services correlates with macro-financial and macro-structural policies and conditions, in addition to individual and country characteristics. We start our analysis on middle and low-income countries, and then zoom in on sub-Saharan Africa, currently the region that most relies on informal financial services, and which has the largest uptake of mobile banking. We find robust evidence of an association between macroprudential policies and individuals’ choice of financial access after controlling for personal and country-level characteristics. In particular, macroprudential policies aimed at controlling credit supply seem to be associated with greater resort to informal financial services compared with formal, bank-based access. This highlights the importance for central bankers and financial sector regulators to consider the potential spillovers of monetary policy and financial stability measures on financial inclusion.
    Keywords: Financial services;Financial inclusion;Mobile banking;Macroprudential policy;Macroprudential policy instruments;WP,informal financial service
    Date: 2020–05–29
  7. By: Martina Metzger; Jennifer Pédussel Wu
    Abstract: This paper examines the potential of digital financial services (Fintech) to increase the development impact of remittances. We discuss both household and macroeconomic perspectives of the nexus of digital financial services, remittances, and financial inclusion. Using our findings, we identify regulatory gaps in dealing with digital financial services to enhance the development impact of remittances. Political and social remittances, as well as collective remittances, and the role of diaspora networks are also considered. We then examine the impact of the Covid-19 pandemic before elucidating major research questions in the political economy of migrant transfers.
    Date: 2020–12
  8. By: Sami Ben Naceur; Ralph Chami; Mohamed Trabelsi
    Abstract: This paper explores the relationship between remittances and financial inclusion for a sample of 187 countries over the period 2004-2015, using cross-country as well as dynamic panel GMM regressions. At low levels of remittances-to-GDP, these flows act as a substitute to formal financial channels, thereby reducing financial inclusion. In contrast, when remittance-to-GDP ratio is high, above 13% on average, they tend to complement formal access and usage channels, thus enhancing financial inclusion. This “U shaped” relationship highlights the role of remittance flows in financing household consumption at low levels, while raising formal household bank savings and allowing for more intermediation, at high levels of remittance-to-GDP.
    Keywords: Financial inclusion;Remittances;Financial services;Commercial banks;Financial sector development;WP,remittance inflow
    Date: 2020–05–22
  9. By: Iwasaki, Ichiro; Kočenda, Evžen; Shida, Yoshisada
    Abstract: In this paper, we traced the survival status of 94,401 small businesses in 17 European emerging markets from 2007–2017 and empirically examined the determinants of their survival, focusing on institutional quality and financial development. We found that institutional quality and the level of financial development impact the survival probability of the researched SMEs in statistically significant and economically meaningful ways. The evidence holds even when we control for a set of firm-level characteristics such as ownership structure, financial performance, firm size, and age. The findings are also uniform across industries and country groups and robust beyond the difference in assumption of hazard distribution, firm size, region, and time period.
    Keywords: small business, institutions, financial development, survival analysis, European emerging markets
    JEL: C14 D02 D22 G33 M21
    Date: 2021–01
  10. By: Amr Hosny
    Abstract: A recent World Bank enterprise survey identified access to finance as the top constraint to Doing Business in Nigeria. In this context, the objective of this paper is two-fold: (i) study firm characteristics associated with more access to finance and export diversification; and (ii) quantify the impact of these structural obstacles on firm performance. Results suggest that (i) larger and export-oriented firms are about 40 percentage points less likely to report access to finance as a business obstacle, while firms perceiving access to finance as a constraint are, on average, about 10-40 percentage points less likely to be export-oriented diversified firms; and (ii) better access to finance and export diversification can help firm employment —as much as 80 percent higher— and capacity utilization. Results are largely robust to different specifications and estimation methods.
    Keywords: Export diversification;Exports;Credit;Capacity utilization;Employment;WP,firm,firm performance,export
    Date: 2020–05–22
  11. By: Patrick J. Kehoe; Pierlauro Lopez; Virgiliu Midrigan; Elena Pastorino
    Abstract: Although a credit tightening is commonly recognized as a key determinant of the Great Recession, to date, it is unclear whether a worsening of credit conditions faced by households or by firms was most responsible for the downturn. Some studies have suggested that the household-side credit channel is quantitatively the most important one. Many others contend that the firm-side channel played a crucial role. We propose a model in which both channels are present and explicitly formalized. Our analysis indicates that the household-side credit channel is quantitatively more relevant than the firm-side credit channel. We then evaluate the relative benefits of a fixed-sized transfer to households and to firms that improves each group's access to credit. We find that the effects of such a transfer on employment are substantially larger when the transfer targets households rather than firms. Hence, we provide theoretical and quantitative support to the view that the employment decline during the Great Recession would have been less severe if instead of focusing on easing firms' access to credit, the government had expended an equal amount of resources to alleviate households' credit constraints.
    JEL: E24 E3 E32 E6 E62 G51 J2 J38 J6 J64
    Date: 2020–12
  12. By: Emanuele Ciola (Department of Management, Universita' Politecnica delle Marche (Italy)); Edoardo Gaffeo (Department of Economics and Management, Universita' degli Studi di Trento (Italy).); Mauro Gallegati (Department of Management, Universita' Politecnica delle Marche (Italy))
    Abstract: This paper develops and estimates a macroeconomic model of real-financial markets interactions in which the behaviour of banks generates endogenous business cycles. We do so in the context of a computational agent-based framework, where the channelling of funds from depositors to investors occurring through intermediaries nformation and matching frictions. Since banks compete in both deposit and credit markets, the whole dynamic is driven by endogenous fluctuations in their profits. In particular, we assume that intermediaries adopt a simple learning process, which consists of copying the strategy of the most profitable competitors while setting their interest rates. Accordingly, the emergence of strategic complementarity - mainly due to the accumulation of information capital - leads to periods of sustained growth followed by sharp recessions in the simulated economy.
    Keywords: Keywords: Agent-based macroeconomics, Simulation-based estimation, Intermediaries behaviour, Business cycles
    JEL: C15 C51 C63 E32 E44
    Date: 2021–01
  13. By: Takuji Komatsuzaki; Steve Brito
    Abstract: We study the growth determinants in the Eastern Caribbean Currency Union (ECCU), using the Growth at Risk (GaR) framework with a focus on financial variables. We find that excessive bank credit growth is associated with lower future real GDP growth in the medium term especially on the low quantiles of growth distribution. Moreover, worsening of both global financial conditions and external conditions are associated with lower future growth in the short term, especially at the high quantiles of growth distribution. Country-specific results are broadly in line with ECCU-wide results, with some variation potentially due to the strong Citizenship-By-Investment program inflows and lack of credit union data. The establishment of a macroprudential framework in the ECCU would need to pay close attention to credit growth not only of banks but also credit unions and continue to monitor global and external conditions.
    Keywords: Credit;Financial soundness indicators;Natural disasters;Bank credit;Credit bureaus;WP,regression coefficient,quantile,estimate
    Date: 2019–11–15
  14. By: International Monetary Fund
    Abstract: This Selected Issues paper develops a Financial Conditions Index (FCI) for Mauritius—an instrument to gauge the operational state of the financial sector and predict real economy activity. The evolution of Mauritius’ financial services sector has been supported by a vibrant offshore corporate sector. Given the strong macro-financial linkages, it is imperative to closely monitor domestic financial developments. Financial developments are broader than monetary developments depicting money supply and interest rates. The FCI is a robust predictor of real GDP growth in Mauritius. The FCI can also help inform macroprudential policy decisions. Decisions on setting the countercyclical capital buffer of Basel III could be informed by analyzing developments in the FCI. As historically Mauritius has not experienced drastic swings in financial credit, testing the constructed FCIs for predicting boom-bust episodes is difficult. Nevertheless, the FCI signaled lax financial conditions in 2009 and again in 2012 that likely contributed to accelerated credit growth in 2012–2013 and a subsequent acceleration in nonperforming loans during 2014–2016.
    Keywords: Private savings;Income;Aging;Exports;Population and demographics;ISCR,CR,Mauritius,GDP,saving,saving rate
    Date: 2019–04–29
  15. By: Antonio Francesco Gravina (University of Messina)
    Abstract: Relying on data for a panel of 90 economies over 1970-2015 and System-GMM estimates, we extend the standard Kuznets-curve empirical framework to investigate how financial development, globalisation and technology affect income inequality. Our findings reveal the presence of significant nonlinearities, consistent with either U-shaped or inverted U-shaped relationships. As such, depending on whether a certain threshold value is achieved, the same determinants of income distribution can exert opposite effects in different countries. Globalisation is associated to increasing inequality in most advanced economies, but to falling disparities for the large majority of emerging economies. Further, while the effects for advanced economies are mixed, technology and financial development lead to increasing inequality for most emerging economies. Hence, particularly in countries in earlier stages of development, policymakers aiming at fostering growth via technological progress or financial development should also consider the nature of the trade-offs with inequality and how policy can improve them.
    Keywords: Inequality, Globalisation, Technology, Finance, Nonlinearity, Panel data
    JEL: C01 C33 F63
    Date: 2020–12
  16. By: Mahir Suleymanov (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic)
    Abstract: This paper aims to analyze the role of FDI inflow in the Russian economy and determine the degree of impact on the economic growth rate. The empirical research captures 2000-2019 years specifying by quarterly time-series. Although, in general, it is considered that the FDI can transmit technology and development to the host country, but this paper shows that in the case of Russia, the role of FDI inflow into the country has an endogenous component, which does not exert a robust impact on the economic growth.
    Keywords: Foreign Direct Investment, economic growth, transition economies, Endogeneity
    JEL: F21 F43
    Date: 2021–01
  17. By: Heydari, Hassan; Jariani, Farzaneh
    Abstract: Our objective in this study is to analyze effective factors of capital outflow from the Middle East and North African countries. Despite a high rate of unemployment, budget deficits, low per capita income, foreign debts and high inequality, the MENA countries are now facing with capital outflow problem and therefore to work out a solution for this problem we should recognize the factors which affect it. In this research, we have postulated the variables showing economic conditions including Gross Domestic Product (GDP) Growth, Inflation and Foreign Exchange Rate Fluctuations, institutions quality variables including economic freedom index, governance and ruling index (The Right to Comment and Responsibility, Political Stability, Government Efficiency and Effectiveness, Rules and Regulations Quality), oil rents, political risks, (Arab Spring and the Global Financial Crisis) as important factors affecting capital outflow from the Middle East and North African countries. The model has been estimated using the GMM method from 2000 to 2018. The results show that improvement of an economic condition such as an increase in economic growth and an increase in the transparency of the governments can be known as good options for reducing the capital outflow from MENA countries.
    Keywords: Capital Flight, Capital Outflow, MENA countries, Middle East Countries, GMM
    JEL: F3 O16 O53 O55
    Date: 2020–12–06
  18. By: Sylviane Guillaumont Jeanneney (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique); Ping Hua (CERDI - Centre d'Études et de Recherches sur le Développement International - Clermont Auvergne - UCA - Université Clermont Auvergne - CNRS - Centre National de la Recherche Scientifique)
    Date: 2020
  19. By: Hadj Fraj, Salma; bouchoucha, Najeh; Maktouf, Samir
    Abstract: This paper aims to explore the relationship between political stability and economic growth with a focus on the role of exchange rate regime. We carried out ordinary least squares (OLS), Generalized least squares (GLS) and system generalized method of moments (GMM). We are based on a panel of 50 countries of which 21 are developed and 29 emerging over the period 1996-2013. We found that political stability is not very important in explaining economic growth, while exchange rate flexibility disrupts the economies of emerging countries and stimulates economic growth in developed countries. The results also show that political stability requires the choice of a flexible exchange rate regime and that exchange rate flexibility leads to political stability in order to stimulate economic growth in emerging countries. However, for developed countries, political stability accelerates economic growth if the exchange rate regime is not too flexible and exchange rate flexibility increases economic activity if the level of political stability is low. Our results show that the nature of exchange rate regime plays a crucial role in the decision to strengthen political and economic stability. The interaction term between political stability and the degree of exchange flexibility is statistically significant, confirming the importance of the theoretical and empirical foundations raised in this research.
    Keywords: Exchange rate regime; political stability; Economic growth; GMM system; Panel data Viaene, J. and Vries, C. (1992).International trade and exchange rate volatility, European Economic Review, Elsevier, vol. 36(6), pages 1311-1321.
    JEL: F0
    Date: 2020–12–08
  20. By: Vincent Bodart; François Courtoy; Erica Perego
    Abstract: With commodities becoming international financial securities, commodity prices are affected by the international financial cycle. With this evidence in mind, this paper reconsiders the macroeconomic adjustment of developing commodity-exporting countries to changes in world interest rates. We proceed by building a model of a small open economy that produces a non-tradable good and a storable tradable commodity. The difference with standard models of small open economies lies in the endogenous response of commodity prices which -due to commodity storage- adjust to variations in international interest rates. We find that the endogenous response of commodity prices amplifies the reaction of commodity exporting countries to international monetary shocks. This suggests that commodity exporting countries are more vulnerable to unfavourable international monetary disturbances than other small open economies. In particular, because of the existence of the commodity price channel, even those small open commodity-exporting economies that are disconnected from international financial markets can be affected by the international financial cycle.
    Keywords: Storable Commodity;International Financial Shock;Developing Economies
    JEL: E32 F41 G15 O11 Q02
    Date: 2021–01
  21. By: Kaninda, Aristote
    Abstract: In DRC, economic growth remains ineffectively influenced by the dynamics of multiple monetary policy factors. In view of this, an attempt is made in this article, examining the role that the quality of governance could play in the relationship between monetary policy and economic growth in this country during the period 1988- 2018. By developing an econometric analysis using the error correction model, it is revealed that the quality of governance plays a major role in the coordination of monetary policies and this positively impacts the economic growth of the DRC. As a result, government authorities must reform their intervention strategies; they must work with the aim of promoting a harmonious development of economic activities through the gradual approximation of economic policies.
    Keywords: Monetary Policy; quality of governance; money supply; time series; cointegration; error correction model; economic growth
    JEL: C32 E42 O11 O55
    Date: 2021–01–12
  22. By: Moez Ben Hassine; Nooman Rebei
    Abstract: We analyze the effects of macroprudential policies through the lens of an estimated dynamic stochastic general equilibrium (DSGE) model tailored to developing markets. In particular, we explicitly introduce informality in the labor and goods markets within a small open economy embedding financial frictions, nominal and real rigidities, labor search and matching, and an explicit banking sector. We use the estimated version of the model to run welfare analysis under optimized monetary and macroprudential rules. Results show that although informality reduces the efficiency of macroprudential policies following a convex fashion, combining the latter with an inflation targeting objective could be beneficial.
    Keywords: Macroprudential policy;Self-employment;Banking;Consumption;Housing;WP,interest rate,monetary policy
    Date: 2019–11–27
  23. By: Itai Agur; Anil Ari; Giovanni Dell'Ariccia
    Abstract: We study the optimal design of a central bank digital currency (CBDC) in an environment where agents sort into cash, CBDC and bank deposits according to their preferences over anonymity and security; and where network effects make the convenience of payment instruments dependent on the number of their users. CBDC can be designed with attributes similar to cash or deposits, and can be interest-bearing: a CBDC that closely competes with deposits depresses bank credit and output, while a cash-like CBDC may lead to the disappearance of cash. Then, the optimal CBDC design trades off bank intermediation against the social value of maintaining diverse payment instruments. When network effects matter, an interest-bearing CBDC alleviates the central bank's tradeoff.
    Keywords: Central Bank digital currencies;Currencies;Payment systems;Banking;Bank deposits;WP,central bank,interest rate,market power
    Date: 2019–11–18
  24. By: Martin Hodula; Jan Janku; Martin Casta; Adam Kucera
    Abstract: This paper tests potential determinants of the development of the insurance sector. Using a rich dataset for 24 European countries spanning two decades, we identify a set of macro-financial factors that are the most robust predictors of growth of gross premiums in the life and non-life insurance sectors. We show that both life and non-life premiums co-move with the business cycle and are positively related to higher savings and a more developed financial system. In addition, we provide new evidence on the role of market concentration and price effects. We find that market concentration matters only for life insurance, whereas the price channel is significant only for non-life insurance. From a policy perspective, our empirical estimates can be used to refine the existing macroprudential stress tests of the insurance sector.
    Keywords: Business cycle, insurance, life insurance, macro-financial determinants, non-life insurance
    JEL: D4 E32 G22
    Date: 2020–12
  25. By: Anna Denkowska; Stanis{\l}aw Wanat
    Abstract: The enlargement of the European Union to new countries in 2004 launched mechanisms supporting the development of various social and economic areas, as well as levelling the differences between the Community members in these areas. This article focuses on the insurance sector. Its main purpose is to analyze the development and similarity of the insurance markets of old and new members of the European Union after the enlargement in 2004.
    Date: 2020–12
  26. By: Monica Billio; Roberto Casarin; Enrica De Cian; Malcolm Mistry; Anthony Osuntuyi
    Abstract: This paper examines the impact of climate shocks on 13 European economies analysing jointly business and financial cycles, in different phases and disentangling the effects for different sector channels. A Bayesian Panel Markov-switching framework is proposed to jointly estimate the impact of extreme weather events on the economies as well as the interaction between business and financial cycles. Results from the empirical analysis suggest that extreme weather events impact asymmetrically across the different phases of the economy and heterogeneously across the EU countries. Moreover, we highlight how the manufacturing output, a component of the industrial production index, constitutes the main channel through which climate shocks impact the EU economies.
    Date: 2020–12

This nep-fdg issue is ©2021 by Georg Man. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.