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on Financial Development and Growth |
| By: | Asongu, Simplice; Nnanna, Joseph; Acha-Anyi, Paul |
| Abstract: | This study investigates the simultaneous openness hypothesis by assessing the importance of trade openness in modulating the effect of foreign direct investment (FDI) on economic dynamics of gross domestic product (GDP) growth, real GDP and GDP per capita. The focus of the study is on 25 countries in Sub-Saharan Africa over the period spanning from 1980 to 2014. First, trade imports modulate FDI to induce net positive effects on GDP growth and GDP per capita. Second, trade exports moderate FDI to generate overall positive impacts on GDP growth, real GDP and GDP per capita. Implications of the study are discussed, inter alia: (i) both FDI and trade infrastructures are necessary for FDI-focused measures to engender positive economic development outcomes in host communities and countries. (ii) Macroeconomic conditions that are relevant for promoting economic development are necessary for the interactions between trade openness and FDI to generate favorable outcomes in terms of GDP growth, real GDP and GDP per capita. |
| Keywords: | Economic Output; Foreign Investment; Sub-Saharan Africa |
| JEL: | E23 F21 F30 L96 O55 |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107135&r=all |
| By: | Reviewed By: Javed Ahmad Khan (Professor, Center for West Asian Studies, Jamia Millia Islamia, New Delhi, India) |
| Abstract: | The economies of the Arab countries are generally projected to have shown not much inclusive economic growth, especially since the second half of the twentieth century. Keeping in view the state of underdevelopment in their economies, several Arab countries had embarked on economic and financial reforms in collaboration with international financial institutions, such as the IMF and the World Bank, in order to overcome their economic difficulties. This book review article sheds light on how the Arab Spring of 2011 resulted in income and wealth inequalities, weak investments, and growing unemployment in Tunisia. The book under review, Making the Tunisian Resurgence, by Mahmoud Sami Nabi, raises theoretical as well as practical debate on the possibility of applying Islamic modes of financing in the present-day Tunisian economy. While highlighting the economic ideas of Ibn Khaldun, the author presents a new alternative to the capitalistic economic model at the practical front and defends at a good length the application of equity finance, Islamic bonds, ?uk?k, crowdfunding, and trade finance, with special focus on the role of participatory banks (Islamic banks), zakah and waqf so as to access the potential of coupling cooperatives and microfinance in generating jobs for youth in the country. اقتصادات الدول العربية لم تظهر الكثير من النمو الاقتصادي الشامل في الغالب، وخاصة منذ النصف الثاني من القرن العشرين. ونظرا لحالة التخلف في اقتصاداتها، شرعت العديد من البلدان العربية في إصلاحات اقتصادية ومالية بالتعاون مع المؤسسات المالية الدولية، مثل صندوق النقد الدولي والبنك الدولي، للتغلب على الصعوبات الاقتصادية. مراجعة الكتاب هذه يلقي الضوء على الكيفية التي أسفر بها الربيع العربي لعام 2011م عن عدم المساواة في الدخل والثروة، وضعف الاستثمارات، وتزايد البطالة في تونس. يثير الكتاب تحت المراجعة "خلق النهضة التونسية"، الذي أعده محمود سامي نابي، جدلاً نظريًا وعمليًا حول إمكانية تطبيق أدوات التمويل الإسلامي في الاقتصاد التونسي الحالي. مع تسليط الضوء على الأفكار الاقتصادية لابن خلدون، يقدم المؤلف بديلاً جديدًا للنموذج الاقتصادي الرأسمالي على الجبهة العملية ويدافع بالتفصيل عن تطبيق تمويل الأسهم والسندات الإسلامية (الصكوك) والتمويل الجماعي والتمويل التجاري، مع التركيز بشكل خاص حول دور البنوك القائمة على المشاركة (البنوك الإسلامية) والزكاة والأوقاف وذلك للاستفادة من إمكانات اقتران المؤسسات التعاونية مع مؤسسات التمويل الأصغر في إيجاد وظائف للشباب في البلاد. |
| Keywords: | Crowdfunding, Ibn Khaldun, Musharakah, Sukuk, Participatory bank, Social justice, Zakah, Waqf. التمويل الجماعي، ابن خلدون، المشاركة، صكوك، البنوك القائمة على المشاركة، العدالة الاجتماعية، الزكاة، الوقف. |
| JEL: | F63 F65 O23 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:abd:jkaubr:1724&r=all |
| By: | Olivier Cattaneo; Cécilia Piemonte |
| Abstract: | Building on the evidence collected through seven country pilots, this Transition Finance Compendium concludes that more could be done to build the resilience of ODA. The analyses carried out suggests that official development assistance (ODA) trends should not be observed in isolation of other sources of financing for sustainable development since transition finance is about the progressive substitution of external financing by domestic public resources and private investment mobilised. It finds that further planning and co-ordination of DAC members’ exit and phasing-out strategies or decisions could generate ODA efficiency gains and resilience; that the increasing complexity of the financing for sustainable development (FSD) landscape creates not only opportunities for access to additional sources of financing, but also risks; and concludes on emerging recommendations for the DAC to better prepare transition, e.g. good practices/relevant standards and tools for transition finance. It ends suggesting how the DAC can move from transition finance diagnostics to implementation. |
| Date: | 2021–04–16 |
| URL: | http://d.repec.org/n?u=RePEc:oec:dcdaaa:94-en&r=all |
| By: | Laurent Le Maux (LED - Laboratoire d'Economie Dionysien - UP8 - Université Paris 8 Vincennes-Saint-Denis) |
| Date: | 2021–03–28 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03183717&r=all |
| By: | NISHIOKA Shuichiro; OKUBO Toshihiro; TANAKA Mari |
| Abstract: | Since the burst of the bubble economy in the early 1990s, the stock and real estate prices collapsed in Japan. Among financial institutions, city banks were impacted the most. As a result, city banks reduced lending markedly, whereas regional banks kept credit flowing to borrowers. We use the plant-level data from the manufacturing sector to examine how regional differences in the share of city banks influenced plant survival. Using the historic share of city banks for each prefecture, we show that survival rates of plants in the mid-1990s were significantly lower in the prefectures with a high share of city banks. However, prefectures that underwent aggressive restructuring of city banks saw no improvements in employment and the prevalence of zombies as well as the reduction of regional markups and productivity. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:21021&r=all |
| By: | Ring, Marius |
| Abstract: | I provide evidence that adverse shocks to the wealth of business owners during the Financial Crisis had large effects on their firms' financing, \ employment, and investment. I use individual-level portfolio data from Norway to exploit the dispersion in stock returns during 2008–09 as a source of exogenous variation in entrepreneurs' wealth. I then trace out the effects of these shocks to the entrepreneurs' privately-held firms. I find that the adverse employment and investment effects are primarily driven by young firms who—relative to mature firms—obtain considerably less bank financing following an owner wealth shock. Firms adjust employment primarily through hiring less, rather than firing, consistent with firms providing extensive-margin insurance for existing workers. These findings provide a causal link between asset price shocks and the real economy; \ and document that equity-financing frictions and the procyclicality of entrepreneurial wealth are important channels through which economic shocks amplify. |
| Keywords: | Financial Crisis; Employment; Entrepreneurs; Equity Financing |
| JEL: | D14 E24 G01 G32 J23 |
| Date: | 2019–09–15 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107020&r=all |
| By: | Alvaro Aguirre |
| Abstract: | This paper builds a quantitative model to assess the optimal allocation of resources in an economy that is subject to a volatile source of income such as commodity exports, and with imperfect access to international financial markets. In this context the government faces a trade-off between smoothing expenditures and accumulating assets for precautionary motives, as well as saving in riskfree assets and investing in physical capital. The features of the model and the solution method allow for a detailed exploration of the trade-offs involved, particularly those related to volatility and uncertainty. The analysis sheds light about optimal saving and spending in stochastic environments, and best responses to large shocks and to permanent changes in stochastic processes. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:chb:bcchwp:909&r=all |
| By: | OGAWA Eiji; Pengfei LUO |
| Abstract: | Globalization has brought larger spillovers of global risks across borders since the 2000s. Specifically, global policy risk has sharply increased due to policy uncertainty in major countries in the recent decade, as seen in Brexit, US-China trade friction, and the COVID-19 pandemic. This paper empirically investigates the effects of both global policy risk and global financial risk on macroeconomy and financial markets in eight major countries from January 1997 to June 2020. We employed a Vector Autoregressive (VAR) framework to obtain interesting empirical results. First, global risks have recessionary effects on the macroeconomy, reducing production, deteriorating employment, lowering long-term interest rates, depressing prices, and reducing global trade. Second, global risks also have recessionary effects on financial markets, reducing stock prices, appreciating safe-haven currencies, and depreciating the other currencies. Third, the macroeconomies and the financial markets respond to global financial risk more significantly than global policy risk. Fourth, the recessionary effects of global risks vary depending on countries. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:21020&r=all |
| By: | Nicolas Himounet (Universite Sorbonne Paris Nord); Francisco Serranito (Universite Sorbonne Paris Nord); Julien Vauday (Universite Sorbonne Paris Nord) |
| Abstract: | A growing empirical literature on how to measure uncertainty has emerged following the 2007-2008 financial crisis. Using a principal component analysis that includes the various measures of uncertainty provided by the literature, we develop a monthly global measure of uncertainty for the United States on the period 1990-2015 and we determine the factors explaining fluctuations in uncertainty. Beyond the general level of uncertainty we also identify a second factor which indicates the nature of the uncertainty, financial or non-financial. We investigate the impact of uncertainty shocks using local projection methods and our general measure of uncertainty. We find a significant negative impact of the general measure on economic activity. However, we obtain a positive and significant effect of the second dimension of uncertainty when the general level of uncertainty is high. |
| Keywords: | Uncertainty, principal component analysis, local projection methods, economic activity |
| JEL: | F |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:inf:wpaper:2021.03&r=all |
| By: | Roman Garcia; Dimitri Lorenzani; Daniel Monteiro; Francesco Perticari; Bořek Vašíček; Lukas Vogel |
| Abstract: | This paper analyses empirically the main direct and indirect transmission channels of financial spillovers and contagion risks in the euro area, focusing on the sovereign-to-sovereign, sovereign-to-bank, and bankto-bank channels. We employ correlation analysis, analysis of bank balance sheets, reduced-form models inferring the interconnectedness among agents from market data, and simulated structural models. The value added by this paper to the literature consists both in analysing the recent episodes of financial distress (until 2019), which happened after reforms of the Economic and Monetary Union (EMU) architecture were introduced in response to the euro area debt crisis, and in our reliance on complementary analytical tools (“tool kit”). Overall, the paper suggests that: (i) sovereign-to-sovereign spillover risks have weakened, arguably also due to a more limited role of redenomination risk; (ii) financial spillovers from sovereigns to banks (and vice versa) have become smaller in recent years; and (iii) the bank-to-bank transmission channel remains the most relevant in terms of financial spillovers and potential contagion. Finally, when analysing the impact of financial spillovers on the real economy, we find that higher financial risks can imply sizeable losses in terms of real GDP growth. |
| JEL: | C01 E43 G01 G21 G28 |
| Date: | 2021–01 |
| URL: | http://d.repec.org/n?u=RePEc:euf:dispap:137&r=all |
| By: | William Gatt; Noel Rapa; Luca Brugnolini (Central Bank of Malta) |
| Abstract: | We extend the Central Bank of Malta’s core DSGE model – MEDSEA – with housing and financial frictions to capture the important theoretical links between house prices, credit and consumption. The model features a rich set of features that are inherent to small open economies in a monetary union. We add a borrowing constraint on a subset of households that is contingent on the value of housing wealth and a maximum loan-to-value (LTV) ratio. We also impose capital requirements on the financial intermediary through a minimum capital-to-assets ratio (CAR) constraint. These two requirements form the basis of a typical macroprudential regime in a developed economy. We show how the macroprudential authority can dampen the rise in credit and consumption during a credit boom by using these two policy tools to ‘lean against the wind’. MEDSEA-FIN is therefore tailored to study macro-financial issues related to housing and credit, and the adequate policy responses. |
| JEL: | C54 E44 E58 E60 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:mlt:wpaper:0420&r=all |
| By: | Jorge M. Uribe (Faculty of Economics and Business (Universitat Oberta de Catalunya); Riskcenter (Universitat de Barcelona); Esade Business School (Universittat Ramon Llull).); Jose E. Gomez-Gonzalez (Escuela Internacional de Ciencias Económicas y Administrativas, Universidad de La Sabana, Chia. Colombia.); Jorge Hirs-Garzón (Inter-American Development Bank, Washington, D.C., USA.) |
| Abstract: | This study shows that capital structure choices of US corporations are interdependent across time. We follow a two-step estimation approach. First, using a large cross-section of firms we estimate year-by-year average capital structure choices, i.e., the average firm’s percentage of new funding that is secured through debt, its term composition, and the percentage of new equity represented by retained earnings. Second, these time series are included in a Factor Augmented Vector Autoregressive model in which three factors representing real economic activity, expected future funding conditions, and prices, are included. We test for the interdependence between optimal capital structure decisions and for the influence exerted by macroeconomic conditions on these decisions. Results show there is a hierarchical order in which firms make capital structure decisions. They first decide on the share of debt out of total new funding they will hire. Conditional on this they decide on the term of their debt and on their earnings retention policy. Of outmost importance, macroeconomic factors are key for making capital structure decisions. |
| Keywords: | Firms’ capital structure, Financing hierarchy, Macroeconomic factors, FAVAR model. JEL classification: D25, G30, L16. |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:202107&r=all |
| By: | Susanto Basu (Boston College); Giacomo Candian (HEC Montréal); Ryan Chahrour (Boston College); Rosen Valchev (Boston College) |
| Abstract: | We identify a shock that explains the bulk of fluctuations in equity risk premia, and show that the shock also explains a large fraction of the business-cycle comovements of output, consumption, employment, and investment. Recessions induced by the shock are associated with reallocation away from full-time permanent positions, towards part-time and flexible contract workers. A real model with labor market frictions and fluctuations in risk appetite can explain all of these facts, both qualitatively and quantitatively. The size of risk-driven fluctuations depends on the relationship between the riskiness and productivity of different stores of value: if safe savings vehicles have relatively low marginal products, then a flight to safety will drive a larger aggregate contraction. |
| Keywords: | Business Cycles; Risk Premia; Uncertainty |
| JEL: | E32 E24 |
| Date: | 2021–04–07 |
| URL: | http://d.repec.org/n?u=RePEc:boc:bocoec:1029&r=all |
| By: | Can Sever; Emekcan Yucel |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:bou:wpaper:2020/01&r=all |
| By: | Evzen Kocenda (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Prague, Czech Republic& Institute of Information Theory and Automation, Prague & CESifo, Munich & IOS, Regensburg); Ichiro Iwasaki (Institute of Economic Research, Hitotsubashi University, Tokyo, Japan) |
| Abstract: | Bank survival is essential to economic growth and development because banks mediate the financing of the economy. A bank’s overall condition is often assessed by a supervisory rating system called CAMELS, an acronym for the components Capital adequacy, Asset quality, Management quality, Earnings, Liquidity, and Sensitivity to market risk. Estimates of the impact of CAMELS components on bank survival vary widely. We perform a meta-synthesis and meta-regression analysis (MRA) using 2120 estimates collected from 50 studies. In the MRA, we account for uncertainty in moderator selection by employing Bayesian model averaging. The results of the synthesis indicate an economically negligible impact of CAMELS variables on bank survival; in addition, the effect of bank-specific, (macro)economic, and market factors is virtually absent. The MRA and a test for publication selection bias produce findings consistent with the synthesis results. Moreover, best practice estimates show a small economic impact of CAMELS components and no impact of other factors. The study concludes that caution should be exercised when using CAMELS rating to predict bank survival or failure. |
| Keywords: | bank survival, bank failure, CAMELS, meta-analysis, publication selection bias |
| JEL: | C12 D22 G21 G33 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2021_09&r=all |
| By: | Nicola Cetorelli; Michael G. Jacobides; Samuel Stern |
| Abstract: | A surprisingly neglected facet of sector evolution is the evolutionary analysis of firms’, and thus a sector’s, scope. Defining a sector as a group of firms that can change their scope over time, we study the transformation of U.S. banking firms. We undertake a sectoral, population-wide study of business-scope transformation, with particular focus on which segments banks expand into. As financial intermediation evolved, a continuously shifting set of activities became associated with “core banking,” with scope changing and relatedness itself (measured through coincidence) evolving over the banking sector’s history. Banks that expand scope while staying close to this evolving core attain net performance benefits. Identification tests show that the benefits of following the evolving core are robust to endogeneity. |
| Keywords: | scope; relatedness; diversification; industry evolution; expansion |
| JEL: | G21 L23 D22 |
| Date: | 2021–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fednsr:90876&r=all |
| By: | Filomeni, Stefano; Modina, Michele; Tabacco, Elena |
| Abstract: | By exploiting a unique and proprietary panel dataset comprising 18,682 Italian SMEs operating with 99 cooperative banks over the period 2008-2014, we investigate the influence of the trade credit channel on firm investment decisions in the Italian market, distinguished by a considerable presence of relationship cooperative banks’ branches with a heterogeneous geographical distribution. Firstly, our findings confirm a significant influence of the trade credit channel on firm investment decisions. Secondly, we document that those SMEs located in those Italian provinces with an abundance of cooperative banks’ branches rely less on trade credit to finance investments. Lastly, we show that longer firm-bank relationships decrease firm dependence on trade credit to boost investments. Our study is of particular relevance because it strengthens the effectiveness of the commercial credit channel for SMEs in spurring corporate investments. Indeed, fostering a deep understanding of the real effects of firm financing sources is paramount to encourage investment by SMEs and to allow them to preserve their positioning in the market. Moreover, we exploit the Italian market, well-suited to perform such an analysis, since it is characterized by more inter-personal financing relationships as compared to other countries. |
| Keywords: | SMEs, trade credit, investment, relationship lending, soft information, cooperative bank |
| Date: | 2021–04–06 |
| URL: | http://d.repec.org/n?u=RePEc:esy:uefcwp:30149&r=all |
| By: | Zarina Adilkhanova (NAC Analytica, Nazarbayev University); Aruzhan Nurlankul (Department of Economics and Finance, EIEF and LUISS); Aizat Token (Department of Economics, Nazarbayev University); Berk Yavuzoglu (Department of Economics, Nazarbayev University) |
| Abstract: | This paper studies the trade credit and delinquency behavior in Kazakhstan paying attention to the effects of two recent crises using a unique dataset of large firms and SMEs from the year 2009 to 2016. Our estimates suggest that the relationship between trade credit and bank loans is mainly substitutional except that it was complementary for large firms following the year 2014-5 crisis. This new piece of evidence might provide more insight into the mixed findings in the literature. We also discern that trade credit demand is more prevalent among capital-intensive firms. Kazakhstani firms pass a sizeable portion of their delinquent receivable to their trade credit suppliers. The transmission of trade credit delinquency, additionally, is amplified during the year 2014-5 economic crisis but the year 2009 global financial crisis. |
| Keywords: | Trade Credit; Delinquency; Financial Crisis; Large Enterprises; SMEs |
| JEL: | D22 G01 G20 G32 |
| Date: | 2020–03 |
| URL: | http://d.repec.org/n?u=RePEc:ajx:wpaper:15&r=all |
| By: | Merike Kukk; Natalia Levenko |
| Abstract: | The paper investigates how much alternative options for corporate financing have affected the quality of domestic corporate bank loans in Estonia. We use quarterly data from 2004Q1–2019Q3 and three different methods to detect the relationship between the non-performing corporate loans of domestic banks and alternative sources of financing for firms. We find that a rise in intra-group borrowing from parent companies is associated with an increase in overdue corporate loans. There is also some evidence that foreign bank loans and trade credit might be positively related to non-performing corporate loans. The results suggest that a broader set of sources of corporate financing beyond domestic bank loans should be considered when assessing the dynamics of the overdue corporate loans of the domestic banking sector. |
| Keywords: | corporate debt, non-performing loans, alternative financing, Bayesian model averaging, local projection method |
| JEL: | G32 G34 C11 C14 |
| Date: | 2021–04–08 |
| URL: | http://d.repec.org/n?u=RePEc:eea:boewps:wp2020-6&r=all |
| By: | Adeabah, David; Asongu, Simplice; Andoh, Charles |
| Abstract: | This study examines the impact of remittances and information and communication technology (ICT) on pension at the country level. Our empirical evidence, based on data from 96 countries, indicate a significant non-linearity between remittances, ICT and pension income coverage. First, we find a convex relation between remittances and pension income coverage, indicating that increases in remittance, initially decreases pension income coverage, but as remittance increases beyond a certain point, so too does pension income coverage. This inflection point, where the effect of remittances turns from negative to positive, is estimated to be around 3.09% of GDP. Second, we document a concave relationship between ICT (i.e. mobile subscription and internet penetration) and pension income coverage. An increase in ICT results in increased pension income coverage. However, when ICT reaches a certain point, any further increase is associated with lower pension income coverage. The estimated optimal point is found to be around 140.14 subscriptions (per 100 people) for mobile phone and 27.93 (per 100 people) for internet penetration, respectively. Other implications are discussed. |
| Keywords: | Pension income coverage; Remittances; Mobile subscription; Internet penetration; ICT |
| JEL: | C5 L96 O1 |
| Date: | 2020–08 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107139&r=all |
| By: | Erik Vardanyan (Economic Research Department, Central Bank of Armenia) |
| Abstract: | The paper explores the impact of workers’ remittances on the level of export diversification. The hypothesis is that significant inflow of remittances causes overvaluation of real exchange rate, which in turn deteriorates diversity of export. The theoretical base is in line with the Dutch disease phenomenon. The paper uses annual cross-national panel data over 2000-2016 period and System GMM methodology. The evidence suggests that indeed large inflow of remittances is associated with less diversified export. The economic intuition behind is that remittance-caused real exchange rate appreciation unevenly suppresses export of goods: some goods "suffer" more than others do. In terms of the number of product-names, a percentage point increase in remittances to GDP sent home "reduces" variety of export by approximately five active lines. There are other interesting findings as well. An improvement of government effectiveness facilitates overall export diversification; terms of trade improvement and rise of real exchange rate volatility mostly increase export concentration rather than alter number of exported product-names. |
| Keywords: | remittances, export diversification, export concentration, export variety, real exchange rate, System GMM |
| JEL: | F14 F24 F31 |
| Date: | 2019–08 |
| URL: | http://d.repec.org/n?u=RePEc:ara:wpaper:010&r=all |
| By: | Asongu, Simplice; Odhiambo, Nicholas |
| Abstract: | In this study, we assess the relevance of decreasing information asymmetry on life and non-life insurance consumption, by using data from 48 African countries during the period 2004-2014. Reduced information asymmetry is proxied by information sharing offices, namely: public credit registries and private credit bureaus. The empirical evidence is based on the Generalised Method of Moments. The findings show that information sharing offices increase insurance consumption with a comparatively higher magnitude in life insurance penetration, relative to non-life insurance penetration. Practical and theoretical implications are discussed. |
| Keywords: | Insurance; Information Asymmetry |
| JEL: | G20 G22 I30 O16 O55 |
| Date: | 2020–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:107136&r=all |
| By: | Elsa Assiaty de L. A. Agostinho; Raquel M. Gaspar |
| Abstract: | Microfinance is seen as an important tool for financial inclusion and the fight against poverty because it has both a social and financial focus. The main objective of this paper is to evaluate the financial and social efficiency of 18 microfinance institutions (MFIs) in the year 2016 from 8 member countries of the Southern African Development Community (SADC). The methodology chosen is the data envelopment analysis (DEA) with variable returns to scale (VRS) using an input-oriented production approach. The results indicate higher scores of financial efficiency than social efficiency. This may suggest that microfinance institutions adopt a more institutionalist approach over the welfarist approach. We also find evidence that providing financial services to women or the entire disadvantaged population is profitable. However, non-bank financial institutions (NBFIs) and non-governmental organizations (NGOs) are more efficient in this regard than credit unions or banks. |
| Keywords: | Microfinance, Financial Efficiency, Social Efficiency, DEA and SADC |
| JEL: | G20 G21 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp01722021&r=all |
| By: | Federico, Domenica; Grazioli, Riccardo; Milioli, Maria Adele; Notte, Antonella; Poletti, Lucia |
| Abstract: | This paper looks at the state of financial and social inclusion and financial sector development in EU Member States. More precisely, one of the objectives is to find out whether financial and social exclusion can coexist in the same countries, taking into account the development of the financial sector. The study outlines extensive literature on definitions and measures of financial and social inclusion. It also identifies clusters of countries, with internally similar but externally distinct characteristics. Methodologically, the research collects and analyses data extrapolated from different sources in the period 2016-2017. The methodology exploits a Principal Component Analysis (ACP) and a Cluster Analysis. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eifwps:202172&r=all |