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on Financial Development and Growth |
| By: | Tarna Silue (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | The paper focuses on the relationship between economic growth and financial inclusion in developing countries. One of the main innovations of the analysis is to report on the contribution to developing new digital financial services such as mobile money. To do this, I first realize a simple endogenous growth model in which the role of the financial sector is to provide sources of investment to included population. The model indicates that consumption could be the main channel through financial inclusion, contributing to growth. Then, the empirical estimation realized using the Generalized Method of Moments (GMM) with 57 countries over 2007-2017 evaluates the impacts of traditional and digital inclusion on growth. The results confirm the positive effect of financial inclusion on growth. For formal inclusion, estimators reveal that the financial system deposits contribute to growth in developing countries. Concerning digital inclusion, we note that an active mobile money account has a higher positive impact on growth than standard inclusion. |
| Keywords: | Endogenous growth,Financial inclusion,Mobile money,GMM System |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03281843&r= |
| By: | Lloyd, S.; Manuel, E.; Panchev, K. |
| Abstract: | We study how foreign financial developments influence the conditional distribution of domestic GDP growth. Within a quantile regression setup, we propose a method to parsimoniously account for foreign vulnerabilities using bilateral-exposure weights when assessing downside macroeconomic risks. Using a panel dataset of advanced economies, we show that tighter foreign financial conditions and faster foreign credit-to-GDP growth are associated with a more severe left tail of domestic GDP growth, even when controlling for domestic indicators. The inclusion of foreign indicators significantly improves estimates of ‘GDP-at-Risk’, a summary measure of downside risks. In turn, this yields time-varying estimates of higher GDP growth moments that are interpretable and provide advanced warnings of crisis episodes. Decomposing historical estimates of GDP-at-Risk into domestic and foreign sources, we show that foreign shocks are a key driver of domestic macroeconomic tail risks. |
| Keywords: | Financial stability, GDP-at-Risk, International spillovers, Local projections, Quantile regression, Tail risk |
| JEL: | E44 E58 F30 F41 F44 G01 |
| Date: | 2021–07–30 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2156&r= |
| By: | Martin Geiger (Liechtenstein-Institut); Elias Hasler (Liechtenstein Financial Market Authority); Martin Gächter (Liechtenstein Financial Market Authority) |
| Abstract: | We examine structural differences in growth vulnerabilities across countries resulting from time-varying financial risk. Considering differences in trade openness, financial sector size, the public spending ratio and government effectiveness, our findings suggest the existence of both a structural gap as well as a risk sensitivity gap when estimating growth-at-risk (GaR) across countries. Hence, structural factors do not only drive level-differences in GaR, but also give rise to differences in the responsiveness of GaR to varying levels of risk. Furthermore, we show that structural factors affect the term structure of GaR, with the impact of structural characteristics varying over the forecasting horizon. A proper understanding of structural factors in the context of the GaR framework is particularly important to facilitate the use of the concept in macroprudential policy. |
| Keywords: | Growth-at-risk; vulnerable growth; structural factors; macroprudential policy |
| JEL: | E27 E32 E44 F43 G01 G20 G28 |
| URL: | http://d.repec.org/n?u=RePEc:lii:wpaper:70&r= |
| By: | Ruiz-García, J. C. |
| Abstract: | How do financial frictions affect firm dynamics, allocation of resources across firms, and aggregate productivity and output? Is the nature of productivity shocks that firms face primary for the effects of financial frictions? I first use a comprehensive dataset of Spanish firms from 1999 to 2014 to estimate non-parametrically the firm productivity dynamics. I find that the productivity process is non-linear, as persistence and shock variability depend on past productivity, and productivity shocks are non-Gaussian. These dynamics differ from the ones implied by a standard AR(1) process, commonly used in the firm dynamics literature. I then build a model of firm dynamics with financial frictions in which productivity shocks are non-linear and non-Gaussian. The model is consistent with a host of evidence on firm dynamics, financial frictions, and firms’ financial behaviour. In the model economy, financial frictions affect the firm life cycle. Without financial frictions, the size of an entrant firm will be three times larger. Furthermore, profit accumulation, which allows firms to overcome financial frictions, is slow, and it only speeds up when firms are mature. As a consequence, the average exiting firm is smaller than it would be without financial frictions. The aggregate consequences of financial frictions are significant. They result in misallocation of capital and reduce aggregate productivity by 16%. This figure is only 8% if productivity dynamics evolve according to a standard AR(1) process. |
| Keywords: | Firm Dynamics, Non-Linear Productivity Process, Financial Frictions, Misallocation |
| JEL: | E22 G32 O16 |
| Date: | 2021–08–03 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:2157&r= |
| By: | Harald Hau (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)); Yi Huang (Graduate Institute of International and CEPR); Hongzhe Shan (Swiss Finance Institute, Swiss Finance Institute, Students); Zixia Sheng (New Hope Financial Services) |
| Abstract: | Based on automated credit lines to more than two million vendors trading on Alibaba’s online retail platform, we show how the take-up of FinTech credit varies with the entrepreneur’s bank distance. Proximity to the branches of the five largest stateowned banks correlates positively with the take-up of FinTech credit and suggests more severe credit frictions for Chinese e-commerce vendors close to such banks. We use a discontinuity in the credit decision algorithm to document that a firm’s credit approval and credit use boost a vendor’s sales and transaction growth. Entrepreneurial growth after access to FinTech credit is largest for younger e-commerce firms and in the month of first-time credit approval. |
| Keywords: | FinTech, credit constraints, micro credit, entrepreneurship |
| JEL: | G20 G21 O43 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2147&r= |
| By: | Gianluigi Coppola (University of Salerno); Sergio Destefanis (University of Salerno); Giorgia Marinuzzi (IFEL); Walter Tortorella (IFEL) |
| Abstract: | We assess the impact of various types of regional policies on the economies of the 20 Italian administrative regions for the 1994-2016 period. Differently from previous works, we assess the impact of various policy funds in four sectors (agriculture, industry, construction, services) through a multi-input multioutput transformation function, and we estimate the policies’ average partial effects through a control function approach incorporating the funds’ allocation rules. Our evidence implies that European Structural Funds had a significant impact on various sectoral components of regional GDP per capita, with the ERDF taking the strongest role. Furthermore, the effectiveness of European Structural Funds is weaker for services, and stronger for industry and (to a lesser extent) agriculture. Nationally funded regional policies do not have any aggregate impact but affect the sectoral composition of GDP. |
| Keywords: | European Structural Funds, control function approach, sectoral development, multi-output multiinput transformation functions |
| JEL: | C43 D24 |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:ahy:wpaper:wp19&r= |
| By: | Umar Mohammed (Ankara Yildirim Beyazit University, Turkey) |
| Abstract: | Sub-Saharan Africa (SSA) continues to lose its skilled workers through migration in a form of brain drain. In return remittances from these migrant workers to the region have been surging and now constitute a major external source of finance. Do these increasing inflow of remittances contribute to human development? This paper examines the impact of remittances on human development in 30 SSA countries using the system Generalized Method of Moments (sGMM) approach for the period 2004-2018. The empirical results show that remittance inflows impact positively on human development in SSA. Based on the empirical results, it is imperative for SSA countries to have a clear-cut policy framework and strategies on migration to attract, increase and harness the full benefit of remittances. |
| Keywords: | Brain drain, Generalized Method of Moments, Human development, Remittances |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:smo:scmowp:01237&r= |
| By: | Eric Monnet,; Angelo Riva,; Stefano Ungaro. |
| Abstract: | We investigate the causal impact of bank runs by exploiting a key feature of the French Great Depression (1930-1931) that created exogenous geographical variations in the withdrawals of bank deposits. Unregulated commercial banks coexisted with government-backed saving institutions (Caisses d’épargne). During the crisis, depositors who had an account in Caisses d’épargne were more likely to withdraw from banks. Pre-crisis density of Caisses d’épargne accounts was unrelated to economic and bank characteristics. Using this variable as an instrument, we find that a 1% decrease in bank branches reduced aggregate income by 1%. Our identification highlights how a shift of deposits towards safer institutions can affect financial fragility. It holds lessons for current financial regulation and the design of central bank digital currency (CBDC). <p> Nous étudions l’impact causal des paniques bancaires en exploitant une caractéristique essentielle de la Grande Dépression française (1930-1931) qui entraîna des variations géographiques exogènes des retraits des dépôts bancaires. Les banques commerciales, non réglementées, coexistaient avec les Caisses d’Épargne, régulées par l’État. Pendant la crise, les déposants titulaires d’un compte dans les Caisses d’épargne étaient plus susceptibles de retirer leurs dépôts des banques. La densité des Caisses d’Épargne au niveau départemental avant la crise n’était pas liée aux caractéristiques économiques et bancaires du département. En utilisant cette variable comme instrument, nous constatons qu’une baisse de 1 % des guichets bancaires réduisit le PIB local de 1 %. Notre identification montre comment un transfert des dépôts vers des institutions plus sûres peut affecter la stabilité financière. Elle permet également de tirer des enseignements pour la réglementation financière actuelle et pour la conception des monnaies digitales de banque centrale (CBDC). |
| Keywords: | bank runs, flight-to-safety, banking panics, Great Depression; ruées bancaires, fuite vers la sécurité, paniques bancaires, Grande Dépression |
| JEL: | E44 E51 G01 G21 N14 N24 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:bfr:decfin:37&r= |
| By: | Gianluca Benigno; Luca Fornaro; Michael Wolf |
| Abstract: | We present a model that reproduces two salient facts characterizing the international monetary system: Fast growing emerging countries i) run current account surpluses, ii) accumulate international reserves and receive net private in flows. We study a two-sector, tradable and nontradable, small open economy. There is a growth externality in the tradable sector and agents have imperfect access to international financial markets. By accumulating foreign reserves, the government induces a real exchange rate depreciation and a reallocation of production towards the tradable sector that boosts growth. Financial frictions generate imperfect substitutability between private and public debt flows so that private agents do not perfectly offset the government policy. The possibility of using reserves to provide liquidity during crises amplifies the positive impact of reserve accumulation on growth. The optimal reserve management en- tails a fast rate of reserve accumulation, as well as higher growth and larger current account surpluses compared to the economy with no policy intervention. The model is also consistent with the negative relationship between in flows of foreign aid and growth observed in low income countries. |
| Keywords: | foreign reserve accumulation, gross capital flows, growth, financial crises, allocation, puzzle, exchange rate undervaluation |
| JEL: | F31 F32 F41 F43 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:bge:wpaper:1279&r= |
| By: | Gianni De Nicolo (Johns Hopkins University - Carey Business School; CESifo (Center for Economic Studies and Ifo Institute)); Nataliya Klimenko (University of Zurich); Sebastian Pfeil (Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE); Erasmus Research Institute of Management (ERIM)); Jean-Charles Rochet (Swiss Finance Institute; University of Geneva - Geneva Finance Research Institute (GFRI); University of Zurich - Swiss Banking Institute (ISB)) |
| Abstract: | We build a stylized dynamic general equilibrium model with financial frictions to analyze costs and benefits of capital requirements in the short-term and long-term. We show that since increasing capital requirements limits the aggregate loan supply, the equilibrium loan rate spread increases, which raises bank profitability and the market-to-book value of bank capital. Hence, banks build up larger capital buffers which (i) lowers the public losses in case of a systemic crisis and (ii) restores the banking sector’s lending capacity after the short-term credit crunch induced by tighter regulation. We confirm our model’s dynamic implications in a panel VAR estimation, which suggests that bank lending has even increased in the long-run after the implementation of Basel III capital regulation. |
| Keywords: | Bank capital requirements, credit crunch, systemic risk |
| JEL: | E21 E32 F44 G21 G28 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2152&r= |
| By: | NAKASHIMA, KIYOTAKA; Ogawa, Toshiaki |
| Abstract: | This study examines the impact of strengthening bank capital supervision on bank behavior in the incomplete enforcement of regulations. In a dynamic model of banks facing persistent idiosyncratic shocks, banks accumulate regulatory capital and decrease charter value and lending in the short run, while in the long run, the banking system achieves stability. To test the short-run implications, we utilize the introduction of the prompt corrective action program in Japan as a quasi-natural experiment. Using some empirical specifications with bank- and loan-level data, we find empirical evidence consistent with the theoretical predictions. |
| Keywords: | regulatory surveillance; incomplete enforcement; heterogeneous bank model; prompt corrective action; bank capital ratio; credit crunch |
| JEL: | G00 G21 G28 |
| Date: | 2021–08–11 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:109147&r= |
| By: | Bernardo Morais; José-Luis Peydró; Claudia Ruiz-Ortega |
| Abstract: | We study the impact of public debt limits on economic growth exploiting the introduction of a Mexican law capping the debt of subnational governments. Despite larger fiscal consolidation, states with higher ex-ante public debt grew substantially faster after the law, albeit at the expense of increased extreme poverty. Credit registry data suggests that the mechanism behind this result is a reduction in crowding out. After the law, banks operating in more indebted states reallocate credit away from local governments and into private firms. The unwinding of crowding out is stronger for riskier firms, firms borrowing from banks more exposed to local public debt, and for firms operating in states with lower public spending on infrastructure projects. |
| Keywords: | Crowding out; Government lending; Subnational debt; Banks; Emerging markets |
| JEL: | D72 G21 L33 P16 |
| Date: | 2021–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgif:1323&r= |
| By: | Ly Dai Hung (Vietnam Institute of Economics, Hanoi, Vietnam) |
| Abstract: | The paper investigates the dependence pattern of economic growth on external debts supply by accounting for the safety of debts, measured by the sovereign debts rating. The method of cross-section regression is based on a sample of 145 advanced and developing economies with averaged data over 1990-2019 period. The pattern of economic growth follows an U-shaped curve, for which the growth rate is first decreasing then increasing on the external debts supply. An possible explaination can rely on the sovereign debts rating. For low supply of external debts, a higher supply of debts reduces the debts rating, which, in turn, lowers the economic growth rate. But for high enough supply of debts, more debts raise their rating, then, improving the growth rate. These results are robust on controlling for various determinants of economic growth and on the fixed-effect panel regression. |
| Keywords: | Economic Growth,Cross-Section Regression,Panel Regression,External Debts |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03277527&r= |
| By: | Omar Ahmed (Université Mohammed V de Rabat [Agdal]); Abdelouahab Maarouf (Université Mohammed V de Rabat [Agdal]) |
| Abstract: | Dans cet article, nous montrons pour le cas de la république de Djibouti que le financement extérieur à des taux concessionnels conduit le gouvernement à en faire un usage contreproductif qui crée un cycle spiral d'endettement entretenue par des déficits récurent généré par des motivations électorales. Ceci est important parce que le financement extérieur prend de plus en plus d'ampleur dans le financement de développement sans que celui-ci ait un impact significatif. Cette étude permet donc de donner un éclairage sur le chemin à suivre dans les années à venir. |
| Date: | 2021–06–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:journl:halshs-03280083&r= |
| By: | Ashima Goyal (Indira Gandhi Institute of Development Research) |
| Abstract: | In order to analyze how the excess of growth over the real interest rate can best contribute to Indian post Covid19 debt adjustment paths, we draw on historical experience, past adjustment episodes and special features of emerging markets (EMs). In many EMs growth (g) routinely exceeds real interest rates (r) because of good growth prospects. But borrowing costs are high and unstable. Volatility and uncertainty can raise risk premiums and interest rates. Both domestic and international risks have to be reduced to lower volatility. With regard to domestic policy, India does show a credible fall in primary deficit ratio (PD) as well as off budget items after fiscal responsibility legislation was introduced. The g-r gap was also positive but pro-cyclical macroeconomic policy made this highly variable. Counter-cyclical policy that stabilizes shocks can keep average g-r at around 5. A counter-cyclical PD will contribute, and together with a substantial g-r gap, lower debt most efficiently, creating space for adequate fiscal response to future shocks. Reducing debt in the medium-term is consistent with Covid19 related fiscal spending. |
| Keywords: | Deficits, Debt, Adjustment paths, Covid19, Emerging markets |
| JEL: | H63 E62 E63 O11 |
| Date: | 2021–06 |
| URL: | http://d.repec.org/n?u=RePEc:ind:igiwpp:2021-016&r= |
| By: | Lawrence Christiano; Hüsnü Dalgic; Armen Nurbekyan |
| Abstract: | This paper pushes back against two views about the effects of dollarization. First, there is a view that the dollar is a device by which rich countries provide business cycle insurance to emerging market (EME) countries. We find that the dollar is important for risk sharing, but the evidence suggests that it is primarily a device to shift business cycle risk across different people within individual EMEs and within rich countries rather than across countries. Second, there is a widespread view that dollarization raises the risk of systemic banking and other crises. Although we identify sources of fragility in some aspects of dollarization, the common view that financial dollarization is a source of fragility is over-stated. Our insurance view about financial dollarization and the lack of risks to financial stability emerges from a study of a large cross-country dataset, as well as case studies for Peru and Armenia. We develop a simple model which formalizes the insurance view, which is consistent with the key cross-country facts on interest rate differentials, deposit dollarization and exchange rate depreciations in recessions. |
| JEL: | F3 F4 G15 |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:29034&r= |
| By: | Jonathan F. Cogliano; Roberto Veneziani; Naoki Yoshihara |
| Abstract: | This paper develops a theoretical and computational framework to analyse imperialistic international relations and the dynamics of international exploitation. A new measure of unequal exchange across borders -- an exploitation intensity index -- is proposed which can be used to characterise the structure of imperialistic international relations in the current global economy. It is shown that wealthy nations are net lenders and exploiters, whereas endowment-poor countries are net borrowers and suffer from exploitation. Capital flows transfer surplus from countries in the core of the global economy to those in the periphery. However, while international credit markets and wealth inequalities are sufficient to generate unequal exchange, they are proved to be insufficient for it to persist. Various possible factors are considered, including technical change and varying social norms, that may explain the persistence of international inequalities. |
| Keywords: | international exploitation; imperialism; capital movements; technical change |
| JEL: | B51 D63 C63 F21 F54 |
| Date: | 2021–08 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:2021-02&r= |
| By: | Muhammad Amir Ingratubun (IPB University, Indonesia) |
| Abstract: | Natural Resources Curse, known as Dutch Disease, is because of capital inflow which promotes in-crease growth and employment level. Indonesia suffers from Dutch Disease working in reverse be-cause of capital outflow, increase unemployment and poverty, and growth retardations from its borrowing from the ADB. I termed this as Dutch Curse because of the colonial connection the Indonesian and Dutch have since the early 17th century. The Dutch Curse is constantly inflicting Indonesia since 1969 because of ADB loans and their disbursement conditionalities. To resolve these issues, it takes more than just the realignment of Indonesia and ADB cooperation, but also moral responsibility and conscious awareness. |
| Keywords: | Dutch disease, Dutch curse, disbursement delays, unsustainable development, negative impact, poverty, unemployment, wealth leakages |
| Date: | 2021–05 |
| URL: | http://d.repec.org/n?u=RePEc:smo:scmowp:01251&r= |
| By: | Steven Ongena (University of Zurich - Department of Banking and Finance; Swiss Finance Institute; KU Leuven; Centre for Economic Policy Research (CEPR)); Sara Pinoli (Bank of Italy); Paola Rossi (Bank of Italy); Alessandro Scopelliti (European Central Bank (ECB) - Directorate General Economics; University of Zurich - Department of Banking and Finance) |
| Abstract: | We study the effects of diversifying funding sources on the financing conditions for firms. We exploit a regulatory reform that took place in Italy in 2012, i.e. the introduction of ‘minibonds’, which opened a new market-based funding opportunity for unlisted firms. Using the Italian Credit Register, we investigate the impact of minibond issuance on bank credit conditions for issuer firms, both at the firm-bank and firm level. We compare new loans granted to issuer firms with new loans concurrently granted to similar non-issuer firms. We find that issuer firms obtain lower interest rates on bank loans of the same maturity than non-issuer firms do, suggesting an improvement in their bargaining power with banks. In addition, issuer firms reduce the amount of used bank credit but increase the overall amount of available external funds, pointing to a substitution with bank credit and to a diversification of corporate funding sources. Studying their ex-post performance, we find that issuer firms expand their total assets and fixed assets, and also raise their leverage. |
| Keywords: | bank credit, capital markets, minibonds, loan pricing, SME finance |
| JEL: | G21 G23 G32 G38 |
| Date: | 2021–04 |
| URL: | http://d.repec.org/n?u=RePEc:chf:rpseri:rp2155&r= |
| By: | Tarna Silue (CERDI - Centre d'Études et de Recherches sur le Développement International - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne) |
| Abstract: | E-money and financial inclusion are both development challenges for developing countries, the former contributing to improving tax mobilization and the latter to achieving particular sustainable development objectives. However, one of the central financial inclusion and e-money services providers is mobile network operators using mobile money. The latter is subject to numerous taxes that can affect their operations. The paper studies the incidence of the new mobile money excise duty in the mobile networks sector on the adoption of electronic money and the advancement of financial inclusion through digital services in sub-Saharan countries. It appears that the introduction of the tax leads to an increase in user fees, which has a positive impact on demand for cash, and it is only in the presence of the latter that MM reduces the demand for cash for studied countries. In addition, the study assumes that tax administrations in these countries would raise more revenue without this excise because the tax is not conducive to the full adoption of e-money. |
| Keywords: | Financial inclusion,Mobile money,Tax incidence |
| Date: | 2021–07 |
| URL: | http://d.repec.org/n?u=RePEc:hal:wpaper:hal-03281898&r= |
| By: | Teye, Evans Sackey; Quarshie, Philip Tetteh |
| Abstract: | Rural and agricultural finance innovations have significant potential to improve the livelihoods and food security of the poor. Although microfinance has been widely studied, an extensive knowledge gap still exists on the nuts and bolts of expanding access to rural and agricultural finance. This study uses focus group discussion, key informant interview, and quantitative household survey to explore how smallholders access credits and loans influence adoption of modern production technologies and what are perceived limitations to access these financial instruments in the Shia-Osuduku District in the Greater Accra Region of Ghana. The specific objectives of the study are; (1) to assess the challenges rice farmers face in accessing finance, (2) to determine if access to finance impacts the adoption of modern rice production technologies and (3) to determine whether loan investments in improved technologies increase productivity and income levels of farmers. The study noted that issues of mistrust for smallholder farmers by financial institutions act as barriers to facilitating their access to loans and credits. Banks and financial institutions relay their mistrust through actions such as requesting outrageous collateral, guarantors, a high sum of savings capital, and a high interest rate for agriculture loans, delays, and bureaucratic processes in accessing loans. The study suggested that enabling policy environment and frameworks with a supportive rural infrastructure such as warehouse receipt systems can significantly increase farmers' access to credit instruments for investment in modern technologies to increase agricultural productivity, which is essential to address food insecurities and rural poverty issues in Ghana. |
| Date: | 2021–08–01 |
| URL: | http://d.repec.org/n?u=RePEc:osf:socarx:9ue2k&r= |
| By: | Mathithibane, Mpho Steve |
| Abstract: | This paper investigates the effect of Foreign Direct Investment (FDI) on the growth of agricultural insurance markets for low-income farmers in Southern Africa for the period 2010 to 2020. Agricultural insurance products for low-income farmers are typically based on weather index insurance contracts. These insurance contracts are cost-effective responses to uninsured agricultural risk in developing economies, and are often considered part of effective ex-ante climate change adaptation strategies. The approach followed in this paper is to assess the extent of FDI transactional flows based on a literature review of past and present pilots as well as market-based weather index insurance schemes. The findings revealed that FDI is relatively low to support weather index insurance development and there exists massive scale for expansion and economic growth opportunities. The study advocates for an improved policy environment with a focus on increasing agricultural productivity among low-income farmers while promoting parallel climate change mitigation strategies, this is likely to have spill-over effects on the acceleration and development of appropriate insurance solutions. |
| Keywords: | Foreign Direct Investment, weather index insurance, Southern African Development Community, Southern African. |
| JEL: | Q14 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108890&r= |
| By: | Sharma, Rajesh; Shahbaz, Muhammad; Sinha, Avik; Vo, Xuan Vinh |
| Abstract: | The growing size of stock market in the South Asian countries might have contributed to raising the level of industrial production and energy consumption. This upturned energy usage might have widened the scope for carbon emissions because these nations heavily rely on fossil fuels. In this milieu, therefore, in the present study, we assessed the impacts of stock market development, per capita income, trade expansion, renewable energy solutions, and technological innovations on carbon intensity in the four South Asia countries from 1990-2016. The empirical results based on the CS-ARDL approach revealed that stock market development, per capita income, and trade expansion invigorated carbon intensity in the South Asian countries. On the contrary, the increased usage of renewable energy solutions and technological advancement helped in reducing the energy-led carbon intensity. Further, the interaction of stock market with renewable energy, and subsequently with technological advancement delivered insignificant coefficients, which indicates the inefficacy of renewable energy and technological advancement in regulating stock market-led carbon intensity during the study period. Therefore, by considering the need for complementarity between economic growth and environmental targets, we proposed a multipronged policy framework, which may help the selected countries to attain the Sustainable Development Goals, with a special focus on SDG 7, 8, 9, and 13. |
| Keywords: | Stock Market Development; Carbon Intensity; South Asian Countries; Technological Innovations; Renewable Energy; CS-ARDL |
| JEL: | Q2 Q3 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:108925&r= |