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on Financial Development and Growth |
| By: | Biswa Nath Bhattacharyay; Madhurima Bhattacharyay |
| Abstract: | Financial sector development plays an important role in promoting economic growth and welfare of the citizen of a country. On the other hand, financial sector instability or vulnerability, can adversely affect the economic growth and cause major disruptions in the country. This paper examines the financial sector development of Brunei Darussalam in terms of depth, access and efficiency during 2014-2018 based on 24 indicators. This paper starts with the examination of the role of the financial sector in the economic development and financial sector stability and reviews the major literature in this area. A discussion on the policies and strategies for the financial sector development and its regulator, Brunei Darussalam Central Bank (BDCB) and the structure of the financial sector of Brunei Darussalam are presented. Lastly, the paper discusses the major prospects and challenges faced by the banking sector as well as the recommendations. The analysis of the aforementioned indicators shows that the performance of Brunei Darussalam in terms of access to banks and financial inclusion had been, on an average, significantly better than its most peers among Association of Southeast Asian Nations (ASEAN) and Gulf Cooperation Council (GCC) countries. In terms of depth and intermediation, the country, however, remained lower throughout the study period compared to its most ASEAN and GCC countries. The efficiency of banking sector, on an average, remained at a moderate level with most indicators lower compared to several ASEAN and GCC peers. There is a scope for further financial sector development through enhancing depth and efficiency of the banking sector and the development of efficient bond and stock markets. This could bring significant benefits for Brunei Darussalam including enhanced growth. |
| Keywords: | banking and financial sector development and indicators, economic growth, financial stability, financial depth, access and efficiency, Brunei Darussalam, ASEAN and GCC countries, fintech companies |
| JEL: | G20 D53 O16 E44 G21 G32 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_9960&r= |
| By: | António Afonso; Krzysztof Beck; Karen Jackson |
| Abstract: | We examine 22 determinants of stock market correlations in a panel setting with 651 country pairs of developed economies over the 2001-2018 period, while accounting for model uncertainty and reverse causality. On the one hand, we find, that a number of determinants, well established in the literature, e.g. trade, institutional distance, and exchange rate volatility fail the robustness test. On the other hand, we find strong evidence supporting several others: (1) inertia, with current correlation being the best single predictor of the future stock market correlation (2) positive impact of the market size (3) imperative role of the interconnected financial factors: capital mobility, financial development, and portfolio equity flows. With the expected future growth of economies and their capital markets as well as deepening financial liberalization, this paper brings strong support to the hypothesis of diminishing international diversification potential. |
| Keywords: | stock market correlations; stock market comovement; financial development; Bayesian model averaging; OECD countries |
| JEL: | G10 G11 G15 F62 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02462022&r= |
| By: | Konté,Maty; Kouame,Wilfried Anicet Kouakou; Mensah,Emmanuel Buadi |
| Abstract: | This paper investigates the effects of financial sector, product market, and trade reforms on labor productivity growth and its two components—the intra-sectoral (within) and inter-sectoral (between) components—in a sample of developing countries over 1975–2005. The paper finds that most of the past trade, product, and financial sector reforms have increased the growth rate of labor productivity. In particular, countries that are further away from the technology leader tend to benefit more from structural reforms than countries closer to the technology frontier. Looking at the subcomponents of labor productivity growth, the paper finds that structural reforms work mostly through the intra-allocative efficiency channel but not through the inter-allocative efficiency channel. The intra-sectoral component is the main driver of the impacts of reforms on labor productivity growth, with a contribution between 76 and 96 percent. |
| Keywords: | Labor Markets,International Trade and Trade Rules,Financial Sector Policy,Macroeconomic Management,Food Security |
| Date: | 2021–07–19 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9733&r= |
| By: | Shijun Gu; Chengcheng Jia |
| Abstract: | How does wealth inequality affect economic growth? Byoungchan Lee answers this question by developing a heterogeneous-agent model and augmenting it with endogenous firm innovation. The novel channel is that rising wealth concentration reduces aggregate demand, which gives firms a disincentive to spend on R&D and therefore leads to slower productivity growth. In this discussion, we first explain the difference in calibration strategy between Lee’s approach and the common approach in the literature, and then discuss its quantitative implications for the effect of rising inequality on aggregate consumption. |
| Keywords: | heterogeneous-agent model; wealth inequality; aggregate consumption; Diversity |
| JEL: | D31 D52 E21 |
| Date: | 2022–10–17 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcwq:94912&r= |
| By: | Mark Setterfield; YK Kim |
| Abstract: | We extend the principles of the Financial Instability Hypothesis (FIH) to the household sector by re-framing the three financial postures associated with the FIH (hedge, speculative, and Ponzi) in the context of households, using a simple model of household borrowing and debt-financing behavior. We also connect our analysis to various strands of research in Comparative Political Economy on credit regimes, the welfare state, and Varieties of Capitalism. Our paper thereby discusses the importance of welfare systems and financial regimes as determinants of household borrowing behavior and hence the financial fragility of the household sector. In so doing it relates to recent US policy debates by demonstrating the macroeconomic consequences of raising taxes on top incomes in order to fund an increase in the social wage. Our results suggest that taxing top incomes to provide social services without accumulating public debt improves macroeconomic resilience and may also improve macroeconomic performance. We therefore uncover some of the values of welfarism that the neoliberal ‘experiment’ inadvertently revealed by ‘rolling back the frontiers of the welfare state’ and in so doing, leading capitalism headlong into the 2007-09 financial crisis. |
| Keywords: | Financial fragility, financial instability hypothesis, household borrowing, household debt, welfare state, macroeconomic resilience |
| JEL: | E12 E44 O41 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:mab:wpaper:2022-02&r= |
| By: | Feyen,Erik H.B.; Mare,Davide Salvatore |
| Abstract: | Reverse stress tests can be a useful tool to evaluate bank resilience to a credit shock,especially in environments where financial data are limited or opaque. This paper develops a simple and transparentcountry-level banking sector resilience indicator that focuses on tail risks, the Consolidated Distance toBreakpoint. Based on individual bank reverse stress test results, this novel metric quantifies the increase innonperforming loans needed to deplete capital buffers for a subset of the most fragile banks that collectively representat least 20 percent of total banking system assets, a level commonly associated with a systemic banking crisis. Thepaper calculates the Consolidated Distance to Breakpoint using public data for more than 1,500 banks in 59 emergingmarket and developing economies during the COVID-19 pandemic. The paper explores the value added of this metricin relation to widely used country-level macro-financial and soundness indicators. The results show that the associationof the Consolidated Distance to Breakpoint with these macro-financial and financial soundness indicators islimited. This suggests that this new indicator encapsulates complementary information, possibly because aggregatemeasures may obscure challenges in individual banks. As such, the Consolidated Distance to Breakpoint metric couldserve as a useful input to establish a basic understanding of a banking sector’s resilience. |
| Keywords: | Banks & Banking Reform,Financial Sector Policy,Economic Growth,Health Care Services Industry |
| Date: | 2021–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9864&r= |
| By: | Miguel Sarmiento |
| Abstract: | Banks in emerging market economies rely on cross-border interbank lending to financing firms in the real sector. By matching cross-border bank-to-bank loan level data with domestic bank-to-firm loan level data, and firm-level data, this paper shows that sudden yield reversal observed during the 2013 Fed taper tantrum resulted in a substantial contraction of cross-border interbank lending in emerging markets that significantly reduced the supply of domestic corporate credit and increased the corporate loan rates. Results show that firms with an ex-ante high concentration of credit granted by exposed banks in the cross-border interbank market exhibited low bank credit and substantial real effects, including a decline in imports and exports. The results further indicate that cross-border intra-group lending and domestic unsecured interbank funding contribute to smoothing the effects of sudden yield reversals on the financial intermediation. Overall, the results are consistent with the notion that banks’ exposition in international credit markets contributes to global financial conditions’ transmission to the economy. ****RESUMEN: Los bancos en las economías de mercados emergentes dependen de los préstamos interbancarios transfronterizos para financiar empresas en el sector real. Usando datos a nivel de préstamos transfronterizos entre bancos, datos a nivel de préstamos domésticos de bancos a firmas y datos a nivel de firma, este documento muestra que la reversión repentina de rendimientos observadas durante el Fed Taper Tantrum de 2013 generó una contracción sustancial del crédito interbancario transfronterizo en los mercados emergentes que resultó en una significativa reducción de la oferta doméstica de crédito corporativo y en mayores tasas de los préstamos. Los resultados muestran que las firmas con una alta concentración de crédito otorgado por los bancos más expuestos en el mercado de préstamos interbancarios transfronterizos exhibieron bajo crédito bancario y efectos reales sustanciales, incluyendo una disminución de las importaciones y exportaciones. Los resultados indican además que los préstamos transfronterizos intra-grupo y el fondeo interbancario doméstico contribuyen a suavizar los efectos de las reversiones repentinas de rendimientos sobre la intermediación financiera. En general, estos resultados son consistentes con la noción de que la exposición de los bancos en los mercados internacionales de crédito contribuye a la transmisión de las condiciones financieras globales en la economía. |
| Keywords: | Sudden Yield Reversals, Cross-Border Interbank Lending, Financial Intermediation, Lending Relationships, Emerging Markets, Reversiones repentinas de rendimientos, Intermediación financiera, Mercados Emergentes, Crédito interbancario transfronterizo, Relaciones bancarias |
| JEL: | E43 E58 L14 G12 G21 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:bdr:borrec:1210&r= |
| By: | Ashton,Helen Louise; Friedman,Jed; Goldemberg,Diana; Hussain,Mustafa Zakir; Kenyon,Thomas; Khan,Akib; Zhou,Mo |
| Abstract: | The identification of key determinants of aid effectiveness is a long-standingquestion in the development community. This paper reviews the literature on aid effectiveness at the project level andthen extends the inquiry in a variety of dimensions with new data on World Bank investment project financing. It confirmsthat the country institutional setting and quality of project supervision are associated with project success, asidentified previously. However, many aspects of the development project cycle, especially project design, havebeen difficult to measure and therefore under-investigated. The paper finds that project design, as proxied by theestimated value added of design staff, the presence of prior analytic work, and other specially collected measures, is asignificant predictor of ultimate project success. These factors generally grow in predictive importance as theincome level of the country rises. The results also indicate that a key determinant of the staff’s contribution is theirexperience with previous World Bank projects, but not other characteristics such as age, education, or country location.Key inputs to the project production process associated with subsequent performance are not captured in routine datasystems, although it is feasible to do so. Further, the conceptualization and measurement of the success ofproject-based aid should be revisited by evaluative bodies to reflect a project’s theorized contribution to development outcomes. |
| Keywords: | Financial Sector Policy,Educational Sciences,Economic Growth,Industrial Economics,Economic Theory & Research,Inequality,Non Governmental Organizations,Economics and Institutions,Public Sector Management and Reform |
| Date: | 2021–12–14 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9884&r= |
| By: | Blanco Cossio,Fernando Andres,Sachdeva,Niharika |
| Abstract: | This paper presents empirical evidence on the cyclicality of investments made by the International Finance Corporation over the past 20 years and explores their implications for the International Finance Corporation’s investment strategy in the aftermath of the COVID-19 pandemic. An Independent Evaluation Group report on World Bank Group operations during the global financial crisis found that the International Finance Corporation’s role was “neutral to procyclical,” as it “did not increase investments in response to the crisis.” This study provides a more detailed assessment of the cyclical patterns of International Finance Corporation investment activity by using a longer time horizon of assessment rather than a specific point-in-time-episode, differentiating original commitments from disbursements, and disaggregating investments across regions and industries. The results of the study confirm that International Finance Corporation investment activity was overall procyclical during 2000–19, but this general pattern masks differences over time and across regions and industries. The paper also examines the relation between the cyclical patterns of International Finance Corporation investment activity and its financial performance. The results suggest that the procyclicality is linked with sounder asset quality (measured by nonperforming loan ratios) and higher profitability (measured by risk-adjusted return on capital), underscoring that prudent portfolio risk management and profit seeking strategies have coexisted with International Finance Corporation investment procyclicality. The procyclicality of International Finance Corporation operations is consistent with its institutional mandate of supporting private sector investment, which is usually procyclical, and the need to maintain an AAA credit rating. Nevertheless, the facts that commitments became less procyclical after the 2008 crisis and the cyclicality of investments varies across regions and industries suggest that there is scope for easing procyclicality without jeopardizing the International Finance Corporation’s financial sustainability. In this context, the International Finance Corporation’s COVID-19 Fast-Track Facility is a case in point for easing investment procyclicality. Moreover, from a medium-term perspective, a less procyclical investment strategy may be more in line with the International Finance Corporation’s 3.0 and Upstream initiatives, which aim at building pipelines of sound projects and prioritizing returns through long-term risk premia and, hence, are undeterred by short-term cyclical volatility. |
| Keywords: | Financial Sector Policy,Investment and Investment Climate,Trade and Multilateral Issues |
| Date: | 2021–07–29 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9746&r= |
| By: | António Afonso; Eduardo de Sá Fortes Leitão Rodrigues |
| Abstract: | We study the impacts of public investment, notably in construction and in R&D on economic growth and of crowding-out effects on private investment. For this purpose, we use Panel Vector Autoregression (PVAR) models and the Generalised Method of Moments (GMM) approach for 40 advanced and emerging countries from 1995 to 2019. Our findings are as follows: i) innovations in public investment have more positive effects on GDP growth and private investment in emerging economies; ii) the positive impulse of public investment on private sector is pronounced and significant in emerging economies; iii) government construction investment has a more positive effect on economic growth in emerging economies; iv) innovations in public construction crowd-out private investment spending in advanced countries; v) emerging economies benefit from public R&D investment; vi) the public investment multiplier of the full sample is 1.67, while it is 0.87 for advanced economies and 2.29 for emerging economies. |
| Keywords: | Public Investment, Construction, Research & Development, PVAR |
| JEL: | C33 E32 H54 |
| Date: | 2022–10 |
| URL: | http://d.repec.org/n?u=RePEc:ise:remwps:wp02492022&r= |
| By: | Mihalyi,David; Hwang,Jyhjong; Rivetti,Diego; Cust,James Frederick |
| Abstract: | This paper investigates the characteristics of resource-backed lending acrossSub-Saharan Africa. To shed light on this type of lending, the paper presents new information on 30 resource-backedloans between 2004 and 2018, identified through publicly available information. These loans were concentrated in afew countries, where they represented a sizable fraction of all borrowing and were typically taken by centralgovernments and state-owned enterprises. Although the loan terms are mostly opaque, where data are available, the studyfinds that such loans are not cheaper than regular loans. The paper highlights opportunities to transparency andoffers some suggestions for improving the governance of collateralized borrowings across developing countries. |
| Keywords: | Financial Sector Policy,Energy and Natural Resources,Coastal and Marine Resources,Public Sector Administrative and Civil Service Reform,Democratic Government,Public Sector Administrative & Civil Service Reform,De Facto Governments,Primary Metals |
| Date: | 2022–02–02 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9923&r= |
| By: | Meyer,Josefin; Reinhart,Carmen M.; Trebesch,Christoph |
| Abstract: | This paper studies external sovereign bonds as an asset class. It compiles a new database of266,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle ofWaterloo) and 2016, covering up to 91 countries. The main insight is that, as in equity markets, the returns onexternal sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns average more than6 percent annually across two centuries, including default episodes, major wars, and global crises. This represents anexcess return of 3–4 percent above US or UK government bonds, which is comparable to stocks and outperformscorporate bonds. Central to this finding are the high average coupons offered on external sovereign bonds. Theobserved returns are hard to reconcile with canonical theoretical models and the degree of credit risk in thismarket, as measured by historical default and recovery rates. Based on an archive of more than 300 sovereign debtrestructurings since 1815, the authors show that full repudiation is rare; the median creditor loss (haircut) isbelow 50 percent. |
| Keywords: | External Debt,Debt Markets,Debt Relief and HIPC,International Trade and Trade Rules,Armed Conflict,Financial Sector Policy |
| Date: | 2022–01–20 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9906&r= |
| By: | Huang, Guangming |
| Abstract: | Replacing government lump-sum transfers in the household budget by the seigniorage channel in a modified RBC economy, this paper finds that the monetary shocks can impact the real economy effectively in the Neoclassical flexible price condition. The mechanism of the effectiveness is the resource reallocation triggered by monetary shocks. There are three outstanding characteristics of the seigniorage channeled monetary economy—integrality, interactive pricing, and Pareto optimality of the unique equilibrium—all of which are found to be incompatible with the existing dynamic general equilibrium monetary economics. Many vexing issues in macroeconomics are clarified through the lens of the seigniorage channeled monetary economy, including the price puzzle, missing of the liquidity effect, cause of the hump in the impulse-response curves, nonneutrality of growth rate of money and inflation, origin of the money market interest rate, choosing of reactive monetary policy rule, and negative movement of hours under a positive technology shock. The simulation shows that the seigniorage channeled monetary economy matches the empirical results in the literature well. |
| Keywords: | Effectiveness of Monetary Shock, Seigniorage Channel, Flexible Price, Nonneutrality of Inflation, Liquidity Effect, Price Puzzle, Monetary Transmission Mechanism, Money Market Interest Rate, Reactive Monetary Policy, Tax, Public Goods, Neoclassical Macroeconomics E13, E3, E4, E52, E6 |
| JEL: | E13 E3 E4 E5 E6 |
| Date: | 2021–01–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114532&r= |
| By: | Ozili, Peterson K |
| Abstract: | This paper presents a discussion of decentralized finance in Africa. It presents some statistics and data on decentralized finance in Africa. Thereafter, the potential benefits, challenges and regulatory issues associated with decentralized finance in Africa are discussed. Recently, there has been an increase in the use of cryptocurrency, decentralized finance applications (dApps) and decentralized financial services (DeFi) in several countries. These innovations facilitate the delivery of financial services using smart contracts. Decentralized finance (DeFi) encompasses all financial services that are built on public blockchains, based on open protocols and removes intermediaries from the financial intermediation process. There is significant cryptocurrency activity in Africa while decentralized finance (DeFi) is relatively new and unpopular in the African continent. There is low interest in decentralized finance in Africa. The benefit of DeFi to African countries include increased liquidity for small and medium scale enterprises (SMEs), new opportunities to raise additional capital to fund capital-intensive activities, it will usher in an era of smart contracts that are negotiated bilaterally without needing an intermediary, it will encourage peer-to-peer trade between economic agents in several African countries, it will enhance the efficiency of the Pan-African Payment Settlement System (PAPSS), and encourage more trade between individuals and corporations under the African Continental Free Trade Agreement (AfCFTA), amongst others. |
| Keywords: | Decentralized finance, Cryptocurrencies, DeFi, dApps, AfCFTA, Bitcoin, blockchain, central bank digital currency crypto technologies, Africa, smart contracts. |
| JEL: | G21 G23 O31 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:114710&r= |
| By: | Feyen,Erik H.B.; Kawashima,Yusaku; Mittal,Raunak |
| Abstract: | On-chain crypto-assets transaction volumes have grown rapidly, particularly during the COVID-19pandemic. Crypto-assets activity appears to be a global phenomenon, although it still remains modest relative togross domestic product for most countries. Panel regressions across more than 130 countries show that the variation incountries’ monthly crypto volumes is mostly driven by globally relevant factors such as real U.S. longer-terminflation expectations, U.S. real Treasury yields, and gold and crypto-asset prices, rather than recent country-levelmacroeconomic developments. Cross-sectional regressions offer tentative evidence that crypto activity is higher incountries with higher information and communications technology adoption and higher reliance on remittances.Taken together, the findings shed new light on the drivers behind crypto activity and offer support to the notions thatcrypto-assets are perceived as a risk asset, a potential macro hedge, and a potential tool to support cross-bordertransactions. However, the results come with caveats: a significant portion of the sample period includesextraordinarily loose global financial conditions; the crypto volume data have a short history, rely on importantlimiting assumptions, and do not represent all crypto activity; and crypto-assets represent a fast-evolving,increasingly diverse asset class and industry. |
| Keywords: | Inflation,Financial Sector Policy,International Trade and Trade Rules,Public Finance Decentralization and Poverty Reduction,Public Sector Economics |
| Date: | 2022–03–08 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9962&r= |
| By: | Mare,Davide Salvatore; De Nicola,Francesca; Miguel Liriano,Faruk |
| Abstract: | This paper analyzes the relationship between financial structure and innovation. Analysis of cross-country micro data over 2009–18 shows that a firm’s financial sources matter for the choice to innovate and the extent to which a firm innovates. The relationship is stronger for firms relying on non-bank financial intermediaries and for firms in low-technology sectors. Moreover, the use of external sources of finance is associated with improved prospects of innovation, especially in more financially developed countries. These findings suggest that developing the financial sector can bring benefits in terms of innovation. |
| Keywords: | Financial Sector Policy,Innovation,Textiles, Apparel&Leather Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Food&Beverage Industry,Common Carriers Industry,Construction Industry,Business Cycles and Stabilization Policies,General Manufacturing,Labor Markets,Financial Economics,Finance and Development |
| Date: | 2021–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9670&r= |
| By: | Liu,Yan-000529044; Wang,Xuan |
| Abstract: | This paper studies the impact of foreign direct investment on domestic firms’ innovation in China. It provides causal evidence by exploiting China’s foreign direct investment deregulation in 2002 and employs a difference-in-difference estimation strategy. Using a matched firm-patent data set from 1998 to 2007, the results show that the quantity and quality of domestic firms’ innovation benefit from foreign direct investment. Moreover, the paper emphasizes the importance of knowledge spillover from foreign direct investment in similar technology domains. The analysis examines the role of horizontal foreign direct investment and foreign direct investment in technologically close industries—industries that share similar technology domains. The findings show that foreign direct investment in technologically close industries generates much bigger positive spillovers than horizontal foreign direct investment. The paper also shows that knowledge spillover from foreign direct investment in similar technology domains is not driven by input-out linkages. Moreover, the spillover effect is stronger in cities with higher human capital stock and firms with higher absorptive capacity. |
| Keywords: | General Manufacturing,Textiles, Apparel&Leather Industry,Business Cycles and Stabilization Policies,Pulp&Paper Industry,Construction Industry,Plastics&Rubber Industry,Common Carriers Industry,Food&Beverage Industry,Intellectual Property Rights,Legal Products,Common Property Resource Development,Social Policy,Regulatory Regimes,Legal Reform,Judicial System Reform,Legislation,Real&Intellectual Property Law,Trade Law,Foreign Trade Promotion and Regulation,Investment and Investment Climate,International Trade and Trade Rules |
| Date: | 2021–05–24 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9672&r= |
| By: | Mensah,Justice Tei; Traore,Nouhoum-000531164 |
| Abstract: | Does ambient infrastructural quality affect foreign direct investment (FDI) in developingcountries This paper investigates how the arrival of high-speed internet in Africa triggered FDI into the bankingand technology services sectors. It also explores the role of complementary infrastructure, such as access to reliableelectricity, in amplifying the impact of internet connectivity on investment. The identification strategyexploits plausibly exogenous variations in access to high-speed internet induced by the staggered arrival ofsubmarine fiber-optic internet cables and the subsequent rollout of terrestrial fiber cable networks across locationson the continent. Findings from the paper show that access to high-speed internet induces FDI into the banking andtechnology sectors. However, the impact pertains mainly to countries with access to reliable electricity, thushighlighting the role of complementarities in the impact of infrastructure. |
| Keywords: | Energy Policies & Economics,Telecommunications Infrastructure,Financial Sector Policy,International Trade and Trade Rules,Investment and Investment Climate |
| Date: | 2022–02–23 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9946&r= |
| By: | Sam Njinyah (Manchester Metropolitan University, UK); Simplice A. Asongu (Yaoundé, Cameroon); Sally Jones (Manchester Metropolitan University, UK) |
| Abstract: | Africa is becoming the fastest-growing continent despite significant challenges to accessing finance and the use of technology. This research aims to examine the direct effect of mobile money adoption on firm performance and its indirect effect by examining how it moderates the effect of access to finance on firm performance. Quantitative data were obtained from the World Bank Enterprise Survey for Cameroon, Ivory Coast and Zimbabwe. A series of hierarchical regression analyses were done to test the hypotheses. The main findings show a negative significant relationship between mobile money adoption and firm performance while access to finance had a positive relationship. The moderation effect though positive was not significant. Research examining the effect of mobile money adoption in Africa on firm performance is limited and existing studies have focused on the determinants of mobile money usage. |
| Keywords: | Mobile money, Access to Finance, Firm Performance, Resource-based view, Sub Saharan Africa |
| Date: | 2022–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:22/075&r= |
| By: | Amin,Mohammad; Motta,Vctor |
| Abstract: | The present paper estimates the impact of bureaucratic corruption on access to finance ofsmall and medium-size enterprises in 114 developing countries. Corruption can hurt small and medium-sizeenterprises’ access to finance by lowering profits, increasing credit demand, increasing bankruptcy chances,creating uncertainty about the firm’s future profit, and exacerbating the asymmetric information problem betweenborrowers and lenders. Consistent with this view, the findings show a large adverse effect of higher corruption onsmall and medium-size enterprises’ access to finance. An increase in corruption from its smallest to highest valueincreases the likelihood of small and medium-size enterprises being financially constrained from 6.9 to 10.9percentage points. The analysis uncovers several heterogeneities in the corruption-finance relationship. Forinstance, the adverse effect of corruption on access to finance is much less in countries where financialinstitutions protect the rights of borrowers and lenders are stronger, laws provide for better credit information, andcredit bureaus exist. The paper argues that these heterogeneities derive from the specific ways in whichcorruption impacts access to finance. Thus, they help to raise confidence against endogeneity concerns about the mainresults. Other heterogeneities uncovered suggest that corruption is more harmful to firms more that, absentcorruption, are known to enjoy better access to finance, such as male versus female owned firms, relatively largefirms, and better performing firms. The results have important policy implications for the growth of small andmedium-size enterprises in the developing world. |
| Keywords: | Financial Sector Policy,Access to Finance,Legal Institutions of the Market Economy,Business Environment,Electric Power |
| Date: | 2021–10–19 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9812&r= |
| By: | Bossavie,Laurent Loic Yves; Gorlach,Joseph-Simon; Ozden,Caglar; Wang,He |
| Abstract: | In the presence of credit constraints, temporary migration abroad provides an effective strategy for workers to accumulate savings to finance self-employment when they return home. This paper provides direct evidence of this link and its effects on workers’ employment trajectories by using a new, large-scale survey of temporary migrants from Bangladesh. It constructs and estimates a dynamic model that establishes connections between asset accumulation and credit constraints, and, thus, between workers’ migration and self-employment decisions. Interlinked impacts also emerge from simulations of three key policy interventions that target migration costs or domestic credit constraints for entrepreneurship. Lowering migration costs increases emigration, reduces the age at which workers depart, and reduces the duration of their time abroad, which together lead to higher savings and domestic self-employment. Reducing the interest rate for entrepreneurial loans reduces migration and savings levels, undercutting the positive effects on business creation at home. Correcting workers’ inflated perceptions about overseas earnings potential reduces emigration rates and durations, triggering a decrease of both repatriated savings and self-employment in Bangladesh. The findings, which have implications for migrant-sending countries, highlight the need for policies to take into account the linkages between migration and self-employment decisions. |
| Keywords: | Employment and Unemployment,Migration and Development,Trade and Services,Private Sector Development Law,Private Sector Economics,Marketing,Labor Markets |
| Date: | 2021–07–28 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9740&r= |