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on Financial Development and Growth |
| By: | Elijah Broadbent; Huberto M. Ennis; Tyler Pike; Horacio Sapriza |
| Abstract: | he provision of bank credit to firms and households affects macroeconomic performance. We use survey measures of changes in bank lending standards, disaggregated by loan category, to quantify the effect of changes in banks’ attitudes toward lending on aggregate output, inflation, and interest rates. Bank lending to businesses is particularly important for macroeconomic outcomes, with peak effects on output of around half a percentage point after four quarters of the initial shock. These effects depend on the stage of the business cycle and the proximity of the short-term interest rate to its effective lower bound. The effects are larger when output is growing below trend and when the interest rate is away from its lower bound. We also find that the response of the economy to lending-standards shocks is asymmetric, with tightening shocks having larger effects on output. |
| Keywords: | Credit Supply; Macroeconomic activity; Loan Portfolio Composition |
| JEL: | E32 E44 G21 |
| Date: | 2024–08–12 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedrwp:98690 |
| By: | Dirk Krueger; Fulin Li; Harald Uhlig |
| Abstract: | This paper characterizes the transition dynamics of a continuous-time neoclassical production economy with capital accumulation in which households face idiosyncratic income risk and cannot commit to repay their debt. Therefore, even though a full set of contingent claims that pay out conditional on the realization of idiosyncratic shocks is available, the equilibrium features imperfect insurance and a non-degenerate cross-sectional consumption distribution. When household labor productivity takes two values, one of which is zero, and the utility function is logarithmic, we characterize the entire transition dynamics induced by unexpected technology shocks, including the evolution of the consumption distribution, in closed form. Thus, the model constitutes an analytically tractable alternative to the standard incomplete markets general equilibrium Aiyagari (1994) model by retaining its physical environment, but replacing the incomplete asset markets structure with one in which limits to consumption insurance emerge endogenously due to limited commitment. |
| JEL: | D11 E21 G22 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32880 |
| By: | Siyu Bie; Francis X. Diebold; Jingyu He; Junye Li |
| Abstract: | We explore tree-based macroeconomic regime-switching in the context of the dynamic Nelson-Siegel (DNS) yield-curve model. In particular, we customize the tree-growing algorithm to partition macroeconomic variables based on the DNS model's marginal likelihood, thereby identifying regime-shifting patterns in the yield curve. Compared to traditional Markov-switching models, our model offers clear economic interpretation via macroeconomic linkages and ensures computational simplicity. In an empirical application to U.S. Treasury bond yields, we find (1) important yield curve regime switching, and (2) evidence that macroeconomic variables have predictive power for the yield curve when the short rate is high, but not in other regimes, thereby refining the notion of yield curve ``macro-spanning". |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2408.12863 |
| By: | Škrinjarić, Tihana (Bank of England) |
| Abstract: | This is a survey of the literature on Growth-at-Risk (GaR) for macroprudential policy stance assessment. After acknowledging the main findings and contributions, we focus on the current challenges that are present in the literature. Key challenges are the measurement and intensity of the policy variable, and the mitigation of endogeneity issues. We suggest improvements on ways to measure the policy itself and its intensity, review policy endogeneity adjustment and different sources of data. Finally, we conclude the review providing insights on future pathways of GaR macroprudential methodology. |
| Keywords: | Systemic risk; financial conditions; quantile regression; policy assessment; policy stance |
| JEL: | C22 E32 E44 E58 G01 G28 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1075 |
| By: | Beck, Thorsten; Ioannidou, Vasso; Perotti, Enrico; Sánchez Serrano, Antonio; Suarez, Javier; Vives, Xavier |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:srk:srkasc:202415 |
| By: | Nikam, Supriya |
| Abstract: | The banking sector plays a pivotal role in the economic development and stability of a country, particularly in developing nations like India, where financial systems are predominantly bank-based. Banks act as primary financial intermediaries, converting deposits into productive investments, which is essential for facilitating economic growth (Ambarkhane et al., 2022). In the 21st century, savers and borrowers have numerous options, such as the share market and mutual funds, which offer high returns but come with significant risks. Despite these alternatives, banks remain crucial for financial stability, although instances of bank failures and scams, such as those involving Punjab National Bank, Yes Bank, and Bank of Baroda, highlight vulnerabilities within the system. The importance of banking in economic development cannot be overstated, as it underpins financial stability, supports economic activities, and enhances growth prospects. Continuous efforts to improve the efficiency and profitability of banks are essential for sustaining economic development and stability (Ambarkhane et al., 2022; Vasudevan, 2018; Al-Homaidi et al., 2018; Almaqtari et al., 2018; Gaur and Mohapatra, 2021). Several reforms have been undertaken to strengthen the banking system in India. The liberalization and privatization efforts have led to increased competition, compelling public sector banks (PSBs) to compete with private and foreign banks under the same regulatory framework (Banerjee and Velamuri, 2015). Profitability in the banking sector can be determined at both micro and macro levels. At the micro level, profit is required to keep banks competitive, while at the macro level, profitability is necessary to absorb external negative shocks and achieve stability (Al-Homaidi et al., 2018). Bank profitability is influenced by a combination of internal and external factors, which can be broadly categorized into bank-specific, industry-specific, and macroeconomic determinants. Non-performing assets (NPAs) negatively affect profitability, as they represent loans that are not generating income and may require provisions for bad debts (Gaur and Mohapatra, 2021; Bapat, 2017). This study analyzes the trend in NPAs and their impact on profitability by considering return on assets (ROA) and return on equity (ROE) as proxies. It examines the variation of NPAs across various bank groups, namely PSBs, private sector banks (PVBs), and foreign banks (FBs), and their impact on profitability. By taking into account other variables, the study aims to determine whether the impact of NPAs on bank profitability is greater compared to other factors. |
| Keywords: | Banking sector, Economic development, Financial stability, India, Financial intermediaries, Economic growth, Non-performing assets (NPAs), Return on assets (ROA), Return on equity (ROE), Public sector banks (PSBs), Private sector banks (PVBs), Foreign banks (FBs), Bank profitability, Banking reforms, Liberalization, Privatization |
| JEL: | E43 E51 E52 E58 G21 |
| Date: | 2024–08–02 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121624 |
| By: | Joanne Tan |
| Abstract: | This paper examines the extent to which FDI has fragmented across countries, the ways it has done so, using a modified gravity approach. The paper finds that FDI fragmentation is, for now, not a widespread phenomenon. Instead, fragmentation is circumscribed in two ways. First, the paper finds that geo-economic fragmentation has occurred only for certain industries that likely have strategic value, including computer manufacturing, information and communications, transport, as well as professional, scientific and technical services. Secondly, fragmentation appears to be more pronounced for outward FDI from the US, notably in a shift of US FDI from China to advanced Europe and the rest of Asia. This shift appears to be driven by both the intensive and extensive margin. Fragmentation is also more pronounced for immediate rather than ultimate FDI, with evidence of ultimate parent companies aligning the geopolitical mix of their intermediaries more closely to that of their final FDI host destinations. Overall, the results suggest that fragmentation, where found, may be a response to targeted policies that have placed curbs on certain types of FDI on national security grounds, rather than an indiscriminate breakup of investment links between non-ally countries. |
| Keywords: | Fragmentation; Foreign Direct Investment |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2024/179 |
| By: | Luigi Lannutti (ESCP Business School) |
| Abstract: | This paper examines how the presence of environmental, social and governance (ESG) regulations in a country can enhance its attractiveness for foreign direct investment (FDI). I use country-level data on ESG regulations from the United Nations (UN)-supported network of investors called Principles for Responsible Investment (PRI). I find that the presence of ESG regulations in a country is significant correlated with higher FDI in high-income countries, and it is also correlated with higher FDI in emerging markets and developing economies (EMDE) when government?s policies are perceived as effective. The presence of ESG regulations is instead negatively correlated with FDI attraction in an EMDE when the quality of the regulatory environment for private business development is perceived negatively. Existing literature does not draw a firm conclusion on whether ESG regulations incentivize or deter private investments; for example, the pollution-heaven hypothesis posits that private investments are drawn where there are fewer or less stringent environmental regulations. This paper contributes to the literature on the role of ESG regulations and to that on the role of policies in FDI attraction, by providing a different perspective on a country?s FDI attraction potential related to the presence of country-level ESG regulations, offering a new range of opportunities for policy makers when considering the impact of ESG regulations in conjunction with the general quality and effectiveness of their regulatory system. |
| Keywords: | Government Policy; Climate; Sustainability; International Investment; Economic Development. |
| JEL: | Q56 Q58 F21 |
| URL: | https://d.repec.org/n?u=RePEc:sek:iacpro:14216212 |
| By: | Giorgio Calcagnini; Germana Giombini; Edgar J. Sanchez Carrera |
| Abstract: | We consider a green monetary policy framework implemented by the central bank. Under this framework, firms and commercial banks decide whether or not to apply a green (environmentally friendly) or brown (conventional) investment and policy, respectively. We develop an evolutionary game to study the conditions under which a stable or unstable equilibrium is reached. If the green firms' revenues minus their bank loans and their transition costs are strictly greater than the brown firms' revenues and their pollution costs, together with (primary or subsidized) green interest rates such that the default risk is lower for green firms compared to brown ones, then the economy evolves to a asymptotically stable green state. In the green state all banks give green loans and all firms invest in green investment. If the condition is reversed the economy converges to a brown state. If the banks and the firms are indifferent towards the green and brown policy and investment respectively, the economy fluctuates from green to brown state. There may be multiple equilibria. Through a transcritical bifurcation we show how stability (instability) of the equilibria changes with the parameters. |
| Keywords: | Climate Change; Evolutionary Dynamics; Green monetary policies; Firms Pollution |
| JEL: | C70 C72 D21 K42 L21 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2024_16.rdf |
| By: | Touray, Alfusainey; Jahateh, Ndey |
| Abstract: | This research paper investigates the nexus between tax revenue and economic growth in The Gambia from 2004Q1 to 2020Q4. The study employs the Autoregressive Distributed Lag (ARDL) model and bound test to analyze the dynamic relationship between tax revenue and economic growth. The bound test of cointegration confirms that tax revenue has a significant impact on both short-term and long-term economic growth in The Gambia. Furthermore, the findings reveal that tax revenue has both positive and negative effects on economic growth in the short run. Initially, tax revenue has an immediate negative impact on economic growth, but over time, within the short run, this impact becomes positive. This suggests the presence of a non-linear effect of tax revenue on economic growth in the short term. However, in the long run, tax revenue has a detrimental effect on economic growth. From a policy standpoint, these results emphasize the need for cautious utilization of tax revenue to avoid hindering long-term economic growth in The Gambia. |
| Keywords: | Tax revenue, aggregate income, economic growth, ARDL model, bounds testing, cointegration, The Gambia |
| JEL: | H2 O4 |
| Date: | 2024–07–29 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121588 |
| By: | Beirne , John (Asian Development Bank); Renzhi, Nuobu (Capital University of Economics and Business) |
| Abstract: | This paper empirically examines the impact of public debt shocks on output and inflation in 34 emerging market economies (EMEs) using panel local projections over the period 2000 to 2022. The estimated results show that real gross domestic product (GDP) falls significantly after an unanticipated increase in public debt while inflation rises. We also examine whether fundamental characteristics across EMEs could affect the impact of public debt shocks. The results suggest that higher initial debt levels, tighter domestic financial conditions, and lower income levels amplify the negative responses of real GDP, while tighter global financial conditions dampen the negative impacts of debt shocks. For inflation, the responses vary depending on economic-specific characteristics. We also find other nonlinearities in the dynamics, with EMEs facing more severe effects during recessionary periods. |
| Keywords: | public debt; GDP; inflation; emerging market economies |
| JEL: | E62 F40 |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:ris:adbewp:0739 |
| By: | Judit Antal; Manos Sfakianakis; Philipp Pfeiffer; Eduardo Llobell |
| Abstract: | The Greek economy has experienced low levels of corporate investment for many years. The Loan Facility is a component of Greece’s Recovery and Resilience Plan (RRP), in the context of the EU-wide NextGenerationEU initiative. Worth about EUR 18 billion, it is the largest measure funded by the EU across all RRPs in terms of percentage of national GDP. The instrument was designed to tackle this critical issue of low investment by facilitating lending to the corporate sector. This paper presents the main features of the Loan Facility from its launch in mid-2022 to the first quarter of 2024. During this period, the loans issued in this context accounted for more than one fifth of new corporate lending in Greece. We find that the terms of the Loan Facility are more favourable than market terms, which has contributed to mitigate the impact of rising interest rates and to support corporate credit demand. We estimate the price (interest rate) advantage at an average of 4.1 percentage points, which is higher for small and medium-sized enterprises (SMEs). The paper also gives a first assessment of the instrument’s economic impact based on data available and simulations, by using the European Commission’s QUEST model. Simulations suggest a sizable positive impact in Greece: private investment may increase significantly and the cumulative impact on GDP between 2022 and 2030 is estimated to reach 5.3% compared to a no-Loan-Facility scenario. The overall impact remains dependent on the pursuit of favourable framework conditions, such as sustained demand. Further structural improvements in investment conditions would be important to prolong the legacy of the Loan Facility beyond its lifetime. |
| JEL: | E22 E27 E44 E61 |
| Date: | 2024–07 |
| URL: | https://d.repec.org/n?u=RePEc:euf:dispap:207 |
| By: | Ruiting Wang; Xue Wang; Gang Xu; Tao Zha |
| Abstract: | We estimate the effects of privatization on zombie versus healthy state-owned enterprises (SOEs) in China, extending our analysis beyond TFP to a broad array of financial and economic indicators. Privatizing zombie SOEs enhances labor productivity and TFP, reduces bank and government subsidies, alleviates leverage and administrative expenses, improves liquidity, boosts profits, and accelerates sales growth. These benefits are more pronounced than for healthy SOEs and are robust across regions and industries. Our findings offer policy implications for emerging markets, suggesting that prioritizing the privatization of underperforming, zombie-like entities can lead to substantial economic improvements and greater efficiency. |
| JEL: | D22 L21 L33 P31 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32795 |
| By: | Dogan, Aydan (Bank of England); Hjortsoe, Ida (Bank of England) |
| Abstract: | Through what channels do fluctuations in the financial costs of exporting affect exports, and how important are financial conditions for export dynamics over the business cycle? We first establish, using balance sheet data for UK manufacturing firms, that exporting firms have more short-term liabilities than non-exporting firms. We find evidence consistent with exporting firms taking on these short-term loans to (partly) cover labour costs. We then build a model with heterogeneous firms in which exporters need to access external finance to export, in line with the evidence, and parameterise it to UK data. We use rich firm level data to inform the calibration of the financial costs facing exporting firms, and estimate the shock processes in our model with Bayesian methods. Our estimations show that global shocks to the financial costs of exporting are the main driver of UK export dynamics over the business cycle, alongside shocks to productivity. These two shocks each contribute to around a third of UK export dynamics. Moreover, we find that global shocks to the financial costs of exporting played a crucial role in explaining the fall in UK exports in the early stages of the Global Trade Collapse, and slowed the recovery. |
| Keywords: | Open economy macroeconomics; small open economy; exports; trade finance; heterogeneous firms |
| JEL: | F41 F44 F47 |
| Date: | 2024–08–05 |
| URL: | https://d.repec.org/n?u=RePEc:boe:boeewp:1072 |
| By: | Ceesay, Habib; Limbe, Medad |
| Abstract: | Remittances are crucial to The Gambian economy, providing a major source of foreign exchange and sustaining the livelihoods of numerous households. In addition, they help in offsetting trade deficit and stabilize the country's external position. However, substantial external inflows into developing economies can lead to an appreciation of the domestic currency, making exports more expensive and reducing competitiveness. This study investigates the impact of remittances on the real effective exchange rate in The Gambia using monthly data from January 2009 to December 2019. Employing the Autoregressive Distributive Lag (ARDL) model, the study finds evidence of a long run cointegrating relationship among the variables. The empirical results reveal that remittance inflows have a positive significant effect on the real effective exchange rate in the long run, indicating that higher remittances lead to an appreciation of the Gambian Dalasi. |
| Keywords: | Remittance, ARDL, the Gambia, exchange rate |
| JEL: | E52 E58 |
| Date: | 2024–08–20 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121774 |
| By: | Menda, Emir |
| Abstract: | This study investigates the relationship between cryptocurrency adoption and stock market capitalization across countries, while controlling for GDP per capita. Using cross-sectional data from 154 countries, we employ ordinary least squares regression to analyze this relationship. The findings reveal a statistically significant positive association between cryptocurrency adoption and stock market capitalization. Specifically, that a one-unit increase in the cryptocurrency adoption score is associated with a 182.614 percentage point increase in stock market capitalization as a percentage of GDP. In addition, GDP per capita shows a significant positive relationship with stock market capitalization, confirming the connection between economic development and financial market depth. These results suggest that cryptocurrency adoption complements traditional financial markets rather than substituting, offering important insights for policymakers, investors, and researchers in understanding the evolving financial landscape. This study contributes to the growing literature on cryptocurrency markets by providing a broader, cross-country perspective on how digital currency growth affects traditional financial markets. Our findings have implications for financial market development, economic policy, and investment strategies in an increasingly digitalized global economy. |
| Keywords: | Cryptocurrency adoption; Stock market capitalization; Cross-country analysis; Financial markets; Economic development |
| JEL: | G00 |
| Date: | 2024–08–22 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121792 |
| By: | Sulehri, Fiaz Ahmad; Audi, Marc; Ashraf, Muhammad Saleem; Azam, Habiba; Bukhari, Syeda Ambreen Fatima; Ali, Amjad |
| Abstract: | Financial integration is important because it has the potential to enhance economic growth and stability by facilitating cross-border capital flows and reducing financial market fragmentation. This study investigates the influence of FinTech credit and banking regulations on financial integration in both developed and developing countries, spanning the period from 2013 to 2019. We consider financial integration to be the dependent variable, and we select FinTech credit, banking regulations, bank concentration, remittance volumes, state-owned enterprises, and financial development as explanatory variables. The study employs the Generalized Method of Moments (GMM) to estimate the coefficients. The findings indicate that FinTech credit, remittance volumes, and financial development all contribute positively to financial integration. In contrast, banking regulations exhibit an insignificant relationship with financial integration. Moreover, the results indicate that bank concentration and state-owned enterprises act as deterrents to financial integration among nations. The implications of the results suggest that to enhance the level of financial integration, global economies should promote FinTech credit, increase remittance volumes, and foster financial development while concurrently discouraging bank concentration and state-owned enterprises. |
| Keywords: | Financial integration, state own enterprises, financial development, FinTech credit, bank regulations, amount of remittances, bank concentration |
| JEL: | G10 G20 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121776 |
| By: | David Hirshleifer; Liang Ma |
| Abstract: | We test and compare the effects of introduction of two new financial information technologies, EDGAR and XBRL, on well-known asset pricing anomalies often attributed to mispricing. EDGAR facilitates easier access to public accounting information about public firms; XBRL reduces the cost of processing such information. Using stacked difference-in-differences regressions, we find that both EDGAR and XBRL reduce mispricing for accounting-based anomalies but not for non-accounting-based anomalies. The economic magnitudes of the effects on accounting-based anomalies are similar for EDGAR and XBRL. These results suggest that both easier access to and less costly processing of public information enhance market efficiency. |
| JEL: | G12 G14 G4 G40 M40 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32767 |
| By: | Kristin Forbes; Jongrim Ha; M. Ayhan Kose |
| Abstract: | We analyse cycles in policy interest rates in 24 advanced economies over 1970-2024, combining a new application of business cycle methodology with rich time-series decompositions of the shocks driving rate movements. “Rate cycles†have gradually evolved over time, with less frequent cyclical turning points, more moderate tightening phases, and a larger role for global shocks. Against this backdrop, the 2020-24 rate cycle has been unprecedented in many dimensions: it features the fastest pivot from active easing to a tightening phase, followed by the most globally synchronized tightening, and an unusually long period of holding rates constant. It also exhibits the largest role for global shocks— with global demand shocks still dominant, but an increased role for global supply shocks in explaining interest rate movements. Inflation and the growth in output and employment have, on average, largely returned to historical norms for this stage in a tightening phase. Any recalibration of interest rates going forward should be gradual, however, taking into account the interactions between increasingly important global factors and domestic circumstances, combined with uncertainty as to whether rate cycles have reverted to pre-2008 patterns. |
| Keywords: | monetary policy, oil prices, demand shocks, supply shocks, ECB, Federal Reserve |
| JEL: | E52 E31 E32 Q43 |
| Date: | 2024–08 |
| URL: | https://d.repec.org/n?u=RePEc:een:camaaa:2024-54 |
| By: | Joachim Jungherr; Matthias Meier; Timo Reinelt; Immo Schott |
| Abstract: | We provide novel empirical evidence that firms’ investment is more responsive to monetary policy when a higher fraction of their debt matures. In a heterogeneous firm New Keynesian model with financial frictions and endogenous debt maturity, two channels explain this finding: (1.) Firms with more maturing debt have larger roll-over needs and are therefore more exposed to fluctuations in the real interest rate (roll-over risk). (2.) These firms also have higher default risk and therefore react more strongly to changes in the real burden of outstanding nominal debt (debt overhang). Unconventional monetary policy, which operates through long-term interest rates, has larger effects on debt maturity but smaller effects on output and inflation than conventional monetary policy. |
| Keywords: | monetary policy; investment; corporate debt; debt maturity |
| JEL: | E32 E44 E52 |
| Date: | 2024–08–16 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedfwp:98708 |
| By: | Schito, Marco; Klimavičiūtė, Luka; Pál, Rozália |
| Abstract: | Does increasing inflation affect firms' investment decisions? This article employs the European Investment Bank Investment Survey (EIBIS) dataset to explore the association between the increased inflation that the EU countries have experienced since 2021, and firms' investment decisions. We find evidence that very high rates of inflation (over 20%) are associated with higher probabilities of investment, likely driven by measures to improve energy efficiency (particularly for SMEs) and a desire to avoid the devaluation of cash reserves (for large firms). We further find a positive association between SMEs' ability to pass costs onto consumers (the so-called pass-through rate) and investment decision, suggesting a higher degree of reliance on the generation of continuous revenues for investment purposes compared with large firms. Inflation's by-products (increased interest rates, difficulties in accessing external financing, increasing uncertainty) are found to be important negative factors in investment decisions. (146 words) |
| Keywords: | EIBIS, inflation, investment, cost pass-through rate, financial tightening, SMEs |
| JEL: | D22 D25 E31 E43 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:eibwps:301874 |
| By: | KOUAKOU, Dorgyles C.M. |
| Abstract: | Using firm-level data from the World Bank Enterprise Surveys, covering 159 countries from 2006 to 2023, we examine whether past informality affects the credit constraints of registered firms. Estimations, based on the entropy balancing method, indicate that registered firms that began operations informally are more likely to be credit-constrained than those that started in the formal sector. This finding is extremely robust to a variety of robustness tests, including instrumental variables, propensity score matching, potential omitted variables, restricted samples, alternative measures of credit constraints, and different specifications such as Linear Probability, Logit, and Probit models. Heterogeneity analysis reveals that the detrimental impact of past informality lessens with firm size, firm age, and better structural factors like regulatory quality, trade openness, entrepreneurial dynamism, and public spending. Productivity, competition from the informal sector, and the quality of financial statements are key channels through which past informality increases credit constraints for registered firms. |
| Keywords: | Past informality status; Credit constraints; Entropy balancing |
| JEL: | G20 O12 O16 O17 |
| Date: | 2024–08–19 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121766 |
| By: | Chowdhury, Emon Kalyan |
| Abstract: | This study examines the critical role of capital market governance in driving Bangladesh's economic growth. The paper analyzes the key components of effective governance, including transparency, fair market conduct, and investor protection. It assesses the current state of capital market governance in Bangladesh, highlighting both strengths, such as demutualization of stock exchanges and improved disclosure regulations, and weaknesses, including uneven corporate governance and limited investor education. The study concludes that by strengthening governance practices, enhancing investor protection, and fostering a conducive regulatory environment, Bangladesh can unlock the full potential of its capital market as a catalyst for economic development. |
| Keywords: | Capital Market Governance, Bangladesh Capital Market, Investor Protection, Economic Growth, Regulatory Framework |
| JEL: | M0 N2 O1 O4 |
| Date: | 2024–08–08 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:121664 |
| By: | Knake, Sebastian |
| Abstract: | In his article, Sebastian Knake challenges the general assumption that traditional savings accounts in the US disappeared naturally as a result of the combination of interest rate regulation and extraordinarily high market interest rates during the stagflation period. By comparing the US experience with simultaneous developments in West Germany, he finds that the opportunity costs of owning a regular passbook were comparable in both countries. In contrast to the US case, however, the passbook remained a cornerstone of household saving in Germany. Drawing upon research in several bank archives in the US and Germany, Knake explains these divergent developments in terms of fundamental differences in how banks and their customers communicated over prices. In the US, a peculiar combination of regulative rules forced banks, and especially savings institutions, to aggressively promote new types of bank accounts that were introduced by federal regulation authorities, thereby increasing nominal interest rate expectations. In Germany, by contrast, banks confined information about advantageous investment opportunities to the smallest possible share of the customer base. These divergent communication strategies reflect a difference in the balance of power in the bank-customer relationship. German customers depended on their primary-and in most cases only-bank relationship to acquire information on alternative investments, while US customers could draw on several relationships with banks and savings institutions to obtain the relevant information. Thus, the fate of the passbook was sealed by the ability or inability of banks to keep their customers in the dark about the real opportunity costs of passbook saving. |
| Keywords: | Savings, Deposits, Interest Expectations, Portfolio Choice, Financial History, Passbook, Comparative History |
| JEL: | G14 G21 N20 N22 N24 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:pp1859:301873 |