nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2023‒08‒21
24 papers chosen by
Georg Man

  1. Financial inclusion, growth and poverty: Evidence from Africa in COVID-19 era By Christian-Lambert Lambert Nguena; Prince Piva Asaloko
  2. The Determinants of Foreign Direct Investment (FDI) A Panel Data Analysis for the Emerging Asian Economies By ATM Omor Faruq
  3. Optimal Ownership and Firm Performance: An Analysis of China’s FDI Liberalization By Peter Eppinger; Hong Ma
  4. Persistent Slumps: Innovation and the Credit Channel of Monetary Policy By Beqiraj, Elton; Cao, Qingqing; Minetti, Raoul; Tarquini, Giulio
  5. Aggregate Lending and Modern Financial Intermediation: Why Bank Balance Sheet Models are Miscalibrated By Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
  6. Capital Shocks and UK Regional Divergence By Michiel Daams; Philip McCann; Paolo Veneri; Richard Barkham
  7. Spending a Windfall By Nuno Palma; André C. Silva
  8. Firm Leverage and Boom-Bust Cycles By Can Sever
  9. Firm-bank relationships: A cross-country comparison By Kosekova, Kamelia; Maddaloni, Angela; Papoutsi, Melina; Schivardi, Fabiano
  10. The Rise of the Walking Dead: Zombie Firms Around the World By Bruno Albuquerque; Roshan Iyer
  11. Loan Recoveries and the Financing of Zombie Firms over the Business Cycle By Demirguc-Kunt, Asli; Horvath, Balint L.; Huizinga, Harry
  12. Intermediaries’ Substitutability and Financial Network Resilience: A Hyperstructure Approach By Olivier Accominotti; Delio Lucena-Piquero; Stefano Ugolini
  13. Systemically important banks - emerging risk and policy responses: An agent-based investigation By Lilit Popoyan; Mauro Napoletano; Andrea Roventini
  14. Bank Branch Density and Bank Runs By Efraim Benmelech; Jun Yang; Michal Zator
  15. Systemic risk indicator based on implied and realized volatility By Pawe{\l} Sakowski; Rafa{\l} Sieradzki; Robert \'Slepaczuk
  16. The real effects of banks nationalization–evidence from the UK By Spatareanu, Mariana; Manole, Vlad; Kabiri, Ali
  17. Central Bank Digital Currency Adoption: A Two-Sided Model By Brandon Tan
  18. Is Money Essential? An Experimental Approach By Janet Hua Jiang; Peter Norman; Daniela Puzzello; Bruno Sultanum; Randall Wright
  19. Bank Competition and Household Privacy in a Digital Payment Monopoly By Mr. Itai Agur; Mr. Anil Ari; Mr. Giovanni Dell'Ariccia
  20. Retail Investors’ Cryptocurrency Investments By Vesa Pursiainen; Jan Toczynski
  21. "Catalysing Entrepreneurial Growth: Unleashing the Potential of Venture Capital and Private Equity in Developing Nations" By Asuamah Yeboah, Samuel
  22. Wealth Inequality in Brazil By Davi Bhering; Fabio Avila de Castro
  23. Green Finance and Inequality By Ola Mahmoud; Tschan Lea
  24. Do bankers want their umbrellas back when it rains? Evidence from typhoons in China By Pauline Avril; Gregory Levieuge; Camelia Turcu

  1. By: Christian-Lambert Lambert Nguena (Université de Dschang, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne); Prince Piva Asaloko (Université de Yaoundé II)
    Abstract: The Covid-19 pandemic threatens to undermine committed efforts to reduce poverty in Africa. Using panel data on 39 African countries covering the period 2004-2021, our analysis shows that financial inclusion, particularly access to financial services, can be an important driver of poverty reduction in African countries. in the era of Covid-19. Moreover, we have identified the reduction of inequalities as the main channel through which financial inclusion can contribute to alleviating poverty. These results are robust and consistent using different estimation methods and poverty change index. Faced with the risks of increasing extreme poverty due to Covid-19, a policy aimed at improving financial inclusion seems necessary.
    Abstract: La pandémie de Covid-19 menace de saper les efforts engagés pour réduire la pauvreté en Afrique. En utilisant des données de panel sur 39 pays africains couvrant la période 2004-2021, notre analyse montre que l'inclusion financière, en particulier l'accès aux services financiers, peut être un facteur important de la réduction de la pauvreté dans les pays africains à l'ère de la Covid-19. De plus, nous avons identifié la réduction des inégalités comme le principal canal par lequel l'inclusion financière peut contribuer à atténuer la pauvreté. Ces résultats sont robustes et cohérents en utilisant différentes méthodes d'estimation et d'indices de changement de pauvreté. Face aux risques d'accroissement de l'extrême pauvreté du fait de la Covid-19, une politique visant une amélioration de l'inclusion financière paraît nécessaire.
    Keywords: Financial inclusion, Poverty, Inequality, COVID-19, Inclusion financière, Pauvreté, Inégalité, Covid-19
    Date: 2023
  2. By: ATM Omor Faruq
    Abstract: In this paper, we explore the economic, institutional, and political/governmental factors in attracting Foreign Direct Investment (FDI) inflows in the emerging twenty-four Asian economies. To examine the significant determinants of FDI, the study uses panel data for a period of seventeen years (2002-2018). The panel methodology enables us to deal with endogeneity and other issues. Multiple regression models are done for empirical evidence. The study focuses on a holistic approach and considers different variables under three broad areas: economic, institutional, and political aspects. The variables include Market Size, Trade Openness, Inflation, Natural Resource, Lending Rate, Capital Formation as economic factors and Business Regulatory Environment and Business Disclosure Index as institutional factors and Political Stability, Government Effectiveness, and Rule of Law as political factors. The empirical findings show most of the economic factors significantly affect FDI inflows whereas Business Disclosure is the only important institutional variable. Moreover, political stability has a significant positive impact in attracting foreign capital flow though the impact of government effectiveness is found insignificant. Overall, the economic factors prevail strongly compared to institutional and political factors.
    Date: 2023–07
  3. By: Peter Eppinger; Hong Ma
    Abstract: Seminal theories of the firm posit that firm ownership is allocated to minimize contractual inefficiencies. Yet, it remains unclear how much the optimal ownership choice affects firm performance in practice. This paper provides a first quantification of the gains from optimal ownership within multinational firms, by exploiting a major liberalization of China’s policy restrictions on foreign ownership. The liberalization allowed previously restricted firms to become fully foreign owned. We find that these reoptimized ownership choices raise firm output by 40% and productivity by 7.5% on average. An extended property-rights theory of the multinational firm rationalizes these effects and their heterogeneity.
    Keywords: multinational firms, ownership, integration, firm performance, property-rights theory, China
    JEL: D23 F21 F23 L22 L23
    Date: 2023
  4. By: Beqiraj, Elton (University of Rome I); Cao, Qingqing (Michigan State University, Department of Economics); Minetti, Raoul (Michigan State University, Department of Economics); Tarquini, Giulio (University of Rome I)
    Abstract: What are the long-run aggregate effects of monetary shocks displaying through the credit channel of monetary policy? We address this question by investigating the transmission mechanism and estimating the dynamic behaviour of variables related to credit and innovation. Then, we develop a DSGE model featuring endogenous growth, in which credit frictions constrain the financing of innovation. Under this paradigm, recessionary shocks develop into persistent stagnation. The deterioration of the R&D process, i.e. creation and adoption of new technologies, is at the core of hysteresis effects. We show the ability of our theoretical framework to reconcile with empirical evidence, quantifying the contribution of this channel to productivity and output hysteresis observed after the Global Financial Crisis.
    Keywords: Endogenous Growth; R&D; Stagnation; Credit Frictions; Monetary Policy
    JEL: E22 E24 E32 E44 E52 G01
    Date: 2023–07–25
  5. By: Greg Buchak; Gregor Matvos; Tomasz Piskorski; Amit Seru
    Abstract: Existing macroeconomic models focused on bank balance sheet lending are deficient because they do not account for the modern industrial organization of financial intermediation. Utilizing publicly available micro-level lending data, we investigate two increasingly significant margins of adjustment in credit markets: banks’ ability to sell loans and shadow bank activity. These adjustment margins are substantial and vary across time and regions with different incomes. We examine these margins in a parsimonious dynamic quantitative model featuring banks with balance sheet adjustment through loan sales and shadow banks. Using the calibrated model, we illustrate that these margins significantly dampen the immediate contraction following bank capital shock. Recovery is also faster, because profitable loan sales (e.g., securitization) allow banks to build capital faster and because shadow banks pick up lending slack. Failure to account for adjustment margins leads to significant errors when studying policies which rely on financial intermediation pass-through in the level of aggregate lending, its direction, and composition. Our model highlights the tension between bank balance sheet models and data. The model, which forces total lending to depend strongly on bank balance sheet health, must reconcile the weak correlation between bank capital and aggregate lending. These issues can be reconciled with now available data from bank balance sheets, overall bank lending, and aggregate lending, in conjunction with a model of modern financial intermediation.
    JEL: G01 G2 G50
    Date: 2023–07
  6. By: Michiel Daams (University of Groningen); Philip McCann (Alliance Manchester Business School, The University of Manchester and The Productivity Institute); Paolo Veneri (OECD, Paris and GSSI, Italy); Richard Barkham (CBRE, Dallas)
    Keywords: real estate investment, UK regions, productivity
    Date: 2023–07
  7. By: Nuno Palma; André C. Silva
    Abstract: We study the effect of the discovery of precious metals in America from 1500 to 1810 on international trade. Around 1500, there was a simultaneous discovery of precious metals and new trading routes. We construct a counterfactual of new routes but no precious metals. The discovery of precious metals increased the stock of precious metals more than tenfold. We show that Euro-Asian trade at its peak increased up to 20 times compared with the counterfactual. Our simulations match the observed price dynamics. We find that precious metals were at least as important as the new routes.
    Keywords: monetary injections; international trade; early modern trade; Euro-Asian trade; real effects of money
    JEL: E40 F40 N10
    Date: 2023–07
  8. By: Can Sever
    Abstract: This paper explores the dynamic relationship between firm debt and real outcomes using data from 24 European economies over the period of 2000-2018. Based on macro data, it shows that a rise in credit to firms is associated with an increase in employment growth in the short-term, but employment growth declines in the medium-term. This pattern remains similar, even when the changes in credit to households are accounted for. Next, using data from a large sample of firms, it shows that firm leverage buildups predict similar boom-bust growth cycles in firm employment: Firms with a larger increase in leverage experience a boost in employment growth in the short-term, but employment growth decreases in the medium-term. Relatedly, the volatility of employment growth increases in the aftermath of firm leverage buildups. Finally, this paper provides suggestive evidence on the role of a financial channel in the relationship between firm leverage buildups and employment growth. The results show that a rise in firm leverage is associated with a persistently higher debt service ratio, pointing the drag on finances. Consistently, boom-bust growth cycles in the aftermath of firm leverage buildups are not limited to employment growth, but are also pronounced for investment. Moreover, the medium-term decline in firm employment growth as predicted by leverage buildups becomes even larger if aggregate financial conditions tighten. The findings are in favor of “lean against the wind” approach in policy making.
    Keywords: Firm leverage; firm debt; household debt; leverage cycles; employment; investment; boom-bust cycles; ORBIS; leverage buildup; employment growth; leverage cycle; growth cycle; cycles in the aftermath; Business cycles; Credit; Consumer credit; Credit booms; Europe; Global
    Date: 2023–06–16
  9. By: Kosekova, Kamelia; Maddaloni, Angela; Papoutsi, Melina; Schivardi, Fabiano
    Abstract: We document the structure of firm-bank relationships across the eleven largest euro area countries and present new stylised facts using novel data from the recent credit registry of the Eurosystem - AnaCredit. We look at the number of banking relationships, reliance on the main bank, credit instruments, loan maturity and interest rates. The granularity of the data allows us to account for cross country differences in firm characteristics. Firms in Southern European countries borrow from a larger number of banks and obtain a lower share of credit from the main bank compared to those in Northern European countries. They also tend to borrow more on short term, more expensive instruments and to obtain loans with shorter maturity. This is consistent with the hypothesis that Southern European countries rely less on relationship banking and obtain credit less conducive to firm growth, in line with the smaller average size of Southern European firms. Instead, no clear pattern emerges in terms of interest rates, consistent with the idea that banks appropriate part of the surplus generated by relationship lending through higher rates.
    Keywords: AnaCredit, Firm-bank relationship, Corporate financing, Bank Credit
    JEL: G21 G3 G32
    Date: 2023
  10. By: Bruno Albuquerque; Roshan Iyer
    Abstract: We build a new dataset of listed and private nonfinancial zombie firms for a large set of Advanced Economies and Emerging Markets over the last two decades. We find that the share of these unproductive and unviable firms has been rising worldwide, especially since the GFC and the Covid-19 pandemic. We show that, perhaps surprisingly, the incidence of zombification is lower among private firms. Lower average survival rates of private firms may explain this phenomenon. We find important negative macrofinancial spillovers from zombie firms: nonzombies’ financial performance is persistently reduced in industries populated with a greater number of zombies. To mitigate these effects, we document that countries with stronger banks, and tighter macroprudential policies tend to have fewer zombies and stronger nonzombies. Strengthening the banking sector may, however, not be sufficient if insolvency frameworks are not well-prepared to deal with the restructuring or insolvency of firms.
    Keywords: Zombie firms; Listed and private firms; Corporate investment; Congestion effects; Macroprudential policies; Panel data; zombie firm; nonfinancial zombie firm; insolvency framework; unviable firm; insolvency of firm; Financial statements; Countercyclical capital buffers; Solvency; Credit; Employment; Global
    Date: 2023–06–16
  11. By: Demirguc-Kunt, Asli; Horvath, Balint L.; Huizinga, Harry (Tilburg University, Center For Economic Research)
    Keywords: loan recovery; zombie firm; business cycle
    Date: 2023
  12. By: Olivier Accominotti; Delio Lucena-Piquero (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville); Stefano Ugolini (LEREPS - Laboratoire d'Etude et de Recherche sur l'Economie, les Politiques et les Systèmes Sociaux - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - UT2J - Université Toulouse - Jean Jaurès - UT - Université de Toulouse - Institut d'Études Politiques [IEP] - Toulouse - ENSFEA - École Nationale Supérieure de Formation de l'Enseignement Agricole de Toulouse-Auzeville)
    Abstract: This article studies the impact of intermediaries' disappearance on firms' access to the sterling money market during the first globalization era of 1880-1914. We propose a new methodology to assess intermediaries' substitutability in financial networks featuring higher-order structures (credit intermediation chains). We represent the financial network as a hyperstructure and each credit intermediation chain as a hyperedge. This approach allows us to assess how the failure of intermediaries affects network connectivity. We apply this methodology to a unique dataset documenting the network structure of the sterling money market in the year 1906. Our results reveal that the failure of individual money market actors could only cause limited damage to the network as intermediaries were highly substitutable. These findings suggest that an international financial network without highly systemic nodes can emerge even at a time of global economic integration.
    Keywords: Financial networks, Systemic risk, Hypergraphs, Intermediation chains, Bills of exchange, Hyperstructures
    Date: 2023–06–28
  13. By: Lilit Popoyan; Mauro Napoletano; Andrea Roventini
    Abstract: We develop a macroeconomic agent-based model to study the role of systemically important banks (SIBs) in financial stability and the effectiveness of capital surcharges on SIBs as a risk management tool. The model is populated by heterogeneous firms, consumers, and banks interacting locally in different markets. In particular, banks provide credit to firms according to Basel III macro-prudential frameworks and manage their liquidity in the interbank market. The Central Bank performs monetary policy according to different types of Taylor rules. Our model endogenously generates banks with different balance sheet sizes, making some systemically important. The additional capital surcharges for SIBs prove to have a marginal effect on preventing the crisis since it points mainly to the ''too-big-to-fail'' problem with minimal importance for ''too-interconnected-to-fail'', ''too-many-to-fail'' and other issues. Moreover, we found that additional capital surcharges on SIBs do not account for the type and management strategy of the bank, leading to the ''one-size-fits-all'' problem. Finally, we found that additional loss-absorbing capacity needs to be increased to ensure total coverage of losses for failed SIBs.
    Keywords: Financial instability; monetary policy; macro-prudential policy; systemically important banks, additional loss-absorbing capacity, Basel III regulation; agent-based models.
    Date: 2023–07–28
  14. By: Efraim Benmelech; Jun Yang; Michal Zator
    Abstract: Bank branch density, defined as the number of bank branches to total deposits, has significantly declined over the past decade, fueled by a confluence of branch closings and the almost doubling of deposits between 2016 and 2022. During this period, banks with low branch density benefited from large deposits inflows, leading to even lower density. But the virtuous cycle of deposits growth in these banks stopped spinning when investors became wary about their financial health. Stock prices of banks with low branch density plummeted during the 2023 Banking Crisis as these banks experienced larger outflows of uninsured deposits. Our results suggest that digital banking enabled banks to grow faster and attract uninsured deposits, but those large deposits inflows took the form of “hot money” that changed its course when economic conditions worsened.
    JEL: E44 E52 G20 G21 G28
    Date: 2023–07
  15. By: Pawe{\l} Sakowski; Rafa{\l} Sieradzki; Robert \'Slepaczuk
    Abstract: We propose a new measure of systemic risk to analyze the impact of the major financial market turmoils in the stock markets from 2000 to 2023 in the USA, Europe, Brazil, and Japan. Our Implied Volatility Realized Volatility Systemic Risk Indicator (IVRVSRI) shows that the reaction of stock markets varies across different geographical locations and the persistence of the shocks depends on the historical volatility and long-term average volatility level in a given market. The methodology applied is based on the logic that the simpler is always better than the more complex if it leads to the same results. Such an approach significantly limits model risk and substantially decreases computational burden. Robustness checks show that IVRVSRI is a precise and valid measure of the current systemic risk in the stock markets. Moreover, it can be used for other types of assets and high-frequency data. The forecasting ability of various SRIs (including CATFIN, CISS, IVRVSRI, SRISK, and Cleveland FED) with regard to weekly returns of S&P 500 index is evaluated based on the simple linear, quasi-quantile, and quantile regressions. We show that IVRVSRI has the strongest predicting power among them.
    Date: 2023–07
  16. By: Spatareanu, Mariana; Manole, Vlad; Kabiri, Ali
    Abstract: How did the nationalization of UK operating banks as a result of the 2008 banking crisis impact their client firms’ performance? We use unique firm-bank data and a propensity score matching technique and find that firms that borrowed from nationalized banks show a slight decrease in the growth of investment and innovation relative to firms that borrowed from non-nationalized banks. Interestingly, we find that firms that borrowed from nationalized banks slightly increase employment, short-term debt and cash holdings. Overall, these firms were able to maintain performance as a result of policy intervention.
    Keywords: bank nationalization; financial crisis; Firm performance; United Kingdom
    JEL: G21 G34 O16 O30
    Date: 2022–01–19
  17. By: Brandon Tan
    Abstract: For central bank digital currencies (CBDCs) to accomplish their intended objectives, it is necessary for both consumers to use them and for merchants to accept them. This paper develops a dynamic two-sided payments model with both heterogeneous households and merchants/firms to study: (1) The adoption of CBDC by households and firms, and (2) The impact of CBDC issuance on financial inclusion, informality, and disintermediation. Our model shows that there is a feedback loop where more households will adopt CBDC if more firms accept CBDC and vice versa -- incentivizing both households and firms will result in greater levels of take-up. Households are more likely to adopt CBDC if it is low cost, provides an attractive savings vehicle, reduces the cost of remittances, improves the efficiency of government payments, and (if accepted by merchants) offers a valuable means of payment. Firms are more likely to accept CBDC if fees are low, if there are tax exemptions or subsidies for transactions made in CBDC, and if households who prefer to make payments with CBDC make up a large share of revenue. Upon CBDC issuance, an economy can get stuck at a steady state with low CBDC adoption and small welfare gains if the features of CBDC which do not rely on merchant acceptance (remuneration, efficiency of cross border and government payments) are not sufficiently attractive, or if the households benefiting from these features make up a small share of merchant revenue. Temporary subsidies and using CBDC for government payments can spur initial take-up to transition an economy to a welfare improving steady state with high(er) CBDC usage. Greater adoption of CBDC will result in greater financial inclusion and formalization, but potentially the disintermediation of banks and card payments. Thus, there is a trade-off in designing CBDC for greater adoption. However, the gains are more likely to outweigh the risks in lower income economies with larger unbanked populations and informal sectors.
    Keywords: Central bank digital currency; financial inclusion; informality; digital money; disintermediation; two-sided market; adoption; payments
    Date: 2023–06–16
  18. By: Janet Hua Jiang; Peter Norman; Daniela Puzzello; Bruno Sultanum; Randall Wright
    Abstract: Monetary exchange is deemed essential when better incentive-compatible outcomes can be achieved with money than without it. We study essentiality both theoretically and experimentally, using finite-horizon monetary models that are naturally suited to the lab. We also follow the mechanism design approach and study the effects of strategy recommendations, both when they are incentive-compatible and when they are not. Results show that output and welfare are significantly enhanced by fiat currency when monetary equilibrium exists. Also, recommendations help if they are incentive-compatible but not much otherwise. Sometimes money is used when it should not be and we investigate why, using surveys and measures of social preferences.
    Keywords: Central bank research; Economic models
    JEL: E4 E5 C92
    Date: 2023–07
  19. By: Mr. Itai Agur; Mr. Anil Ari; Mr. Giovanni Dell'Ariccia
    Abstract: Lenders can exploit households' payment data to infer their creditworthiness. When households value privacy, they then face a tradeoff between protecting such privacy and credit conditions. We study how the introduction of an informationally more intrusive digital payment vehicle affects households' cash use, credit access, and welfare. A tech monopolist controls the intrusiveness of the new payment method and manipulates information asymmetries among households and oligopolistic banks to extract data contracts that are more lucrative than lending on its own. The laissez-faire equilibrium entails a digital payment vehicle that is more intrusive than socially optimal, providing a rationale for regulation.
    Keywords: Privacy; Financial intermediation; Big Tech; Data regulation; data contract; payment vehicle; DC issuer; tech monopolist; bank competition; monopolist digital currency issuer; Credit; Digital financial services; Loans; Consumer credit; Data collection
    Date: 2023–06–09
  20. By: Vesa Pursiainen (University of St. Gallen; Swiss Finance Institute); Jan Toczynski (University of Zurich; Swiss Finance Institute)
    Abstract: We use transaction data gathered by a large fintech firm to study retail investors’ investments in cryptocurrencies. Crypto investors tend to be young, male, high-income, and live in wealthy urban areas with high levels of self-employment and low levels of altruism. Crypto investments are positively associated with stock investments and the use of robo-investing apps, as well as with gambling and the use of round numbers. Net flows into cryptocurrencies are negatively correlated with short-term past returns but positively with longer-term ones. Historical high and low price points also seem to matter. Personal initial experiences of crypto returns at adoption affect subsequent crypto investments. Investors exhibit little market timing ability, but controlling for the time of entry, women do better and stock investors worse.
    Keywords: cryptocurrency, retail investors, fintech, market timing
    JEL: G11 G23 G51
    Date: 2023–06
  21. By: Asuamah Yeboah, Samuel
    Abstract: This systematic review examines the importance, role, and challenges of venture capital (VC) and private equity (PE) in driving entrepreneurial activities in developing nations. The review synthesizes existing literature and identifies key findings related to the impact of VC and PE on entrepreneurial growth and economic development. It explores barriers to accessing VC and PE, regulatory and legal challenges, as well as cultural and institutional factors that shape the VC and PE landscape in developing nations. The review also provides policy recommendations and highlights areas for further research, emphasizing the potential impact of VC and PE in driving entrepreneurial activities and fostering sustainable economic development in developing nations.
    Keywords: Venture capital, private equity, entrepreneurship, economic development, developing nations, access to capital, regulatory framework, institutional factors
    JEL: G24 L26 O16
    Date: 2023–06–12
  22. By: Davi Bhering (PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement); Fabio Avila de Castro (Brazilian Federal Revenue Agency)
    Abstract: This note provides novel estimates of wealth distribution in Brazil from 2006 to 2021, combining administrative and survey data. The estimations indicate that the wealthiest 1% of the population held 44.8% of the total wealth in 2006 and 46.8% in 2021. The increase was steeper for the top 0.01%, with the wealth share rising from 12.2% to 18%. Financial wealth is significantly more concentrated than real estate and becomes relatively more important as we move up the distribution. In the top 0.1%, financial wealth accounts for about 80% of reported wealth, while real estate represents no more than 15%. The greater relative importance of financial wealth at the very top, combined with the faster growth of financial wealth observed over the period, potentially explains the concentration trend.
    Keywords: Wealth Distribution, Brazil
    Date: 2023–07
  23. By: Ola Mahmoud (University of St. Gallen; University of California at Berkeley; Swiss Finance Institute); Tschan Lea (University of St. Gallen)
    Abstract: This paper provides empirical evidence for a significant positive association between green finance and top income inequality from a panel of 87 countries from 2004 to 2020. This relationship is strongest for countries with initially lower levels of income, low levels of financial development, and low levels of carbon emissions. We also find evidence that the effect on inequality persists for four years and thereafter abates. We argue that the association between green finance and inequality is at least partially driven by two mechanisms: technological change and investment emissions. Using a moderated mediation design, we show that technological change and investment emissions are partially mediating the relationship between green finance and top income inequality.
    Keywords: green finance, inequality, innovation
    JEL: D63 E44 O33 Q52 Q54 Q55
    Date: 2023–06
  24. By: Pauline Avril (University of Orleans); Gregory Levieuge (Banque de France and University of Orleans); Camelia Turcu (University of Orleans and West University of Timisoara)
    Abstract: A cataclysmic event might lead to a decrease in lending, while banks would be expected to help with recovery. This study investigates which effect dominates. In particular, our paper explores how typhoons affect the lending activities of Chinese banks. It relies on the exposure of more than 161, 000 bank branches held by 327 Chinese banks over the period from 2004 to 2019. Our difference-in-difference estimates reveal that, on average, typhoons trigger a decrease in lending that accounts for 2.8 percent of total bank assets. This decline comes from commercial banks. On the contrary, rural banks act as shock absorbers. This may be the consequence of long-term lending relationships and banks’ better knowledge of local economic and physical risks. The absence of rural banks is even found to be detrimental to local post-typhoon growth. Last, government ownership and external political pressure mitigate the relative decline in lending by typhoon-hit commercial banks.
    Keywords: Typhoons, lending, banking system, China, shock absorbers, shock transmitters
    JEL: F
    Date: 2023

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