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on Financial Development and Growth |
| By: | Yao, Koffi Yves; Kouakou, Auguste Konan; |
| Abstract: | This paper examines the essential role of migration and remittances in development across sub-Saharan Africa, with a particular focus on Côte d’Ivoire. It demonstrates that these financial flows help alleviate poverty and stabilise the economy in the short term while fostering long-term development through investments in human capital, entrepreneurship, and social protection. However, several challenges persist: excessive reliance on remittances may hinder local productivity, weaken exports, and increase import dependency. The paper recommends policies aimed at economic diversification, enhanced financial inclusion, reduced transfer costs, and better-coordinated migration policies to maximise the developmental benefits of remittances. |
| Keywords: | Migration, Remittances, Financing of Development |
| JEL: | F22 F24 O1 |
| Date: | 2025–02–13 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123655 |
| By: | Herman Boleilanga Koko (Université de Mbandaka); Elie BOLA BOONGO (UNIKIS - Université de Kisangani); Héritier Bekoka Wanga (CBRN - Centre de recherche COE/CBRN/RDC) |
| Abstract: | Cette recherche examine la relation entre la dette publique, l'aide au développement et la utilisant un modèle économétrique ARDL (Auto Régressive Distributed Lag), l'étude évalue économique. En effet, une augmentation de l'aide au développement de 1% entraîne une hausse croissance économique en République Démocratique du Congo (RDC) de 1994 à 2020. En impact positivement significatif sur la croissance économique de l'année considérée. En effet, 0.0216% àl'année considérée. A long terme : La dette publique a un impact positivement économique. Les résultats de cette étude démontrent qu'à court terme : La dette publique a un une augmentation de la dette de 1% entraîne une augmentation de la croissance économique de la dette de 1% entraîne une augmentation de la croissance économique de 0.0313% àl'année significatif sur la croissance économique de l'année considérée. En effet, une augmentation de considérée. L'aide au développement a un impact positif mais non significatif sur la croissance comment la dette publique et l'aide publique au développement influencent la croissance de la croissance économique de 1.2814%. |
| Keywords: | Dette publique, Aide publique au développement, croissance économique, gouvernance, gouvernance Public debt, Official development assistance, economic growth, governance |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04962162 |
| By: | Goldemberg, Diana; Jordan, Luke Simon; Kenyon, Thomas |
| Abstract: | This paper applies novel techniques to long-standing questions of aid effectiveness. It first replicates findings that donor finance is discernibly but weakly associated with sector outcomes in recipient countries. It then shows robustly that donors' own ratings of project success provide limited information on the contribution of those projects to development outcomes. By training a machine learning model on World Bank projects, the paper shows instead that the strongest predictor of these projects’ contribution to outcomes is their degree of adaptation to country context, and the largest differences between ratings and actual impact occur in large projects in institutionally weak settings. |
| Date: | 2023–07–31 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10532 |
| By: | Pierre Beaucoral |
| Abstract: | Analyzing development projects is crucial for understanding donors aid strategies, recipients priorities, and to assess development finance capacity to adress development issues by on-the-ground actions. In this area, the Organisation for Economic Co-operation and Developments (OECD) Creditor Reporting System (CRS) dataset is a reference data source. This dataset provides a vast collection of project narratives from various sectors (approximately 5 million projects). While the OECD CRS provides a rich source of information on development strategies, it falls short in informing project purposes due to its reporting process based on donors self-declared main objectives and pre-defined industrial sectors. This research employs a novel approach that combines Machine Learning (ML) techniques, specifically Natural Language Processing (NLP), an innovative Python topic modeling technique called BERTopic, to categorise (cluster) and label development projects based on their narrative descriptions. By revealing existing yet hidden topics of development finance, this application of artificial intelligence enables a better understanding of donor priorities and overall development funding and provides methods to analyse public and private projects narratives. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.09495 |
| By: | McDonald, Terry; Klasche, Benjamin; Tamm, Kristo; Ng'ang'ira, Kamau Samuel |
| Abstract: | In this idea paper, our team tries to create a framework through which one can begin to apply a comparable measurement to cases of China’s influence in Africa and other states in which it is investing. This Indicators of Influence model we propose could be of use not only in analyzing individual relationship cases, but serve as a comparison method for understanding China’s (or potentially another investing state’s) leverage within a given recipient country. Amid a rise in discourse about new forms of great power competition, suggestions of debt-traps and neo-colonialism contrasted with assertions of South-South cooperation and new models of development, the framework comes along at a useful time. |
| Date: | 2023–04–22 |
| URL: | https://d.repec.org/n?u=RePEc:osf:socarx:cs5ka_v1 |
| By: | Stamm, Kersten Kevin; Vorisek, Dana Lauren |
| Abstract: | Investment growth in emerging market and developing economies (EMDEs) is expected to remain below its average rate of the past two decades through the medium term. This subdued outlook follows a decade-long, geographically widespread investment growth slowdown before the COVID-19 pandemic. An empirical analysis covering 2000-21 finds that periods of strong investment growth were associated with strong real output growth, robust real credit growth, terms of trade improvements, growth in capital inflows, and investment climate reform spurts. Each of these factors has been decreasingly supportive of investment growth since the 2007-09 global financial crisis. Weak investment growth is a concern because it dampens potential growth, is associated with weak trade, and makes achieving the development and climate-related goals more difficult. Policies to boost investment growth need to be tailored to country circumstances, but include comprehensive fiscal and structural reforms, including repurposing of expenditure on inefficient subsidies. Given EMDEs’ limited fiscal space, the international community will need to significantly increase international cooperation, official financing and grants, and leverage private sector financing for adequate investment to materialize. |
| Date: | 2023–03–15 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10364 |
| By: | Montfaucon, Angella Faith Lapukeni; Senelwa, Victor Kidake; Doarest, Aufa |
| Abstract: | The Indonesian government implemented comprehensive investment reforms in 2021 to encourage investment inflows and related positive impacts. Compared to the previous investment regulation in 2016, the new decree removed foreign direct investment restrictions in over 500 business activities. By estimating the difference in difference in difference event study model, this paper empirically assesses the response in (realized and planned) foreign direct investment and realized domestic direct investment to the reforms. The paper also assesses whether there was growth in investments in fully liberalized sectors linked to Sustainable Development Goals as a proxy for the quality of investment. The results suggest that the investment reforms were associated with increases in realized foreign direct investment, realized direct domestic investment, and planned foreign direct investment, especially in fully liberalized sectors, while there was a decline in all three types of investments in the non-liberalized sectors. The results for planned foreign direct investment suggest that the increase in fully liberalized sectors is likely to continue. The results on direct domestic investment suggest a possible crowding-in effect. Among the fully liberalized sectors, the base metal industry was a key driver of growth, and s ectors linked to Sustainable Development Goals sectors had mixed results. The findings provide suggestive evidence of the complementary effect of trade reforms, although the analysis does not specify which of the several reforms may have led to the increase. These results are robust when the possible effects of Covid-19 recovery and other macroeconomic factors are controlled for. These results are also robust to alternative event study models. Further analysis would be needed to observe the trajectory in both the quality and quantity of investment going forward, the distributional effects and the needed complementary reforms to ensure sustainable gains beyond the short run. |
| Date: | 2023–06–08 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10478 |
| By: | Doumbia, Djeneba; Ul Haq, Imtiaz; Saltane, Valentina |
| Abstract: | Does issuer composition change as stock markets grow, and, if so, how An increase in market capitalization may be driven by growth on the intensive or extensive margin. Such growth may also influence the level of market concentration and diversity among listed firms. Using a novel dataset, this paper examines how the number, concentration, and sectoral diversity of issuers change as domestic stock markets grow, with a focus on low- and middle-income countries. The results show that an increase in stock market capitalization tends to be associated with only growth on the intensive margin. Greater market activity, however, is linked to entry of new issuers and for low- and middle-income countries, also to marginally lower market concentration. However, there is no evidence that sectoral diversity changes with market size or activity. These findings have important implications for firm financing as stock markets may not necessarily become more inclusive as they grow. |
| Date: | 2023–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10523 |
| By: | Marguerie, Alicia Charlene; Premand, Patrick |
| Abstract: | Policy makers grapple with the optimal design of multidimensional strategies to improve poor households’ livelihoods. To address financial constraints, are capital injections needed, or is savings mobilization sufficient This paper tests the direct effects and local spillovers of three instruments to relax financial constraints, each combined with micro-entrepreneurship training. “Cash grants” and “cash grants with repayment” directly inject capital, while “village savings and loan associations” (VSLAs) promote more efficient group saving. The randomized controlled trial took place in western regions of Côte d’Ivoire that were affected by a post-electoral crisis in 2011 and an earlier conflict. The interventions had differential effects on the dynamics of savings and productive asset accumulation. The cash grant modalities generated investments in startup capital, although nearly 30 percent of the grant was saved. In contrast, village savings and loan associations did not increase total savings but gradually induced investments, so that productive assets caught up with cash grant recipients after 15 months. Positive local spillovers on savings and independent activities were also observed. Yet, investments in independent activities were not sufficient to increase profits, possibly because they were limited due to high precautionary saving motives in the post-conflict study setting. |
| Date: | 2023–09–09 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10563 |
| By: | Loeser, John Ashton |
| Abstract: | The household welfare gains from financial inclusion are empirically elusive. This paper establishes that household welfare gains from a financial technology are equal to the area under dynamically compensated demand in a household model with incomplete financial markets, and general technology, preferences, and choice sets. This paper then estimates compensated demand for financial technologies leveraging three randomized control trials that introduce experimental variation in interest rates. Welfare gains per dollar lent or saved are small as compensated demand elasticities are large, but still correspond to large aggregate welfare gains from financial inclusion. |
| Date: | 2023–06–12 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10481 |
| By: | Klein, Thilo |
| Abstract: | Microcredit, a financial tool providing uncollateralized loans to low-income individuals, has seen a shift from joint-liability (JL) to individual liabil- ity (IL) lending models. This article tests a theory explaining this shift, focusing on borrowers matching into groups exposed to similar economic shocks under JL, diminishing its effectiveness. I reconcile conflicting theo- retical predictions and propose an empirical strategy to distinguish adverse selection from moral hazard effects. Using data from Thailand, I find that increasing diversity within borrower groups leads to a 10 percentage point improvement in timely repayment. These results inform contract design and strategies to reduce information asymmetries in lending practices |
| Keywords: | microcredit, joint liability, diversification, market design, stable matching, endogeneity, selection model, agriculture, Thailand |
| JEL: | C11 C31 C34 C36 C78 C57 D02 D47 D82 G21 O16 Q14 |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:zewdip:312189 |
| By: | Paul Gertler; Brett Green; Renping Li; David Sraer |
| Abstract: | Pay-as-you-go (PAYGo) financing is a novel contract that has recently become a popular form of credit, especially in low- and middle-income countries (LMICs). PAYGo financing relies on lockout technology that enables the lender to remotely disable the flow benefits of collateral when the borrower misses payments. This paper quantifies the welfare implications of PAYGo financing. We develop a dynamic structural model of consumers and estimate the model using a multi-arm, large scale pricing experiment conducted by a fintech lender that offers PAYGo financing for smartphones. We find that the welfare gains from access to PAYGo financing are equivalent to a 3.4% increase in income while remaining highly profitable for the lender. The welfare gains are larger for low-risk consumers and consumers in the middle of the income distribution. Under reasonable assumptions, PAYGo financing outperforms traditional secured loans for all but the riskiest consumers. We explore contract design and identify variations of the PAYGo contract that further improve welfare. |
| JEL: | D14 D86 G21 G23 |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:33484 |
| By: | Fiorin, Stefano; Hall, Joseph; Kanz, Martin |
| Abstract: | Debt moratoria that allow borrowers to postpone loan payments are a frequently used tool intended to soften the impact of economic crises. This paper reports results from a nationwide experiment with a large consumer lender in India, designed to study how debt forbearance offers affect loan repayment and banking relationships. In the experiment, borrowers receive forbearance offers that are presented either as an initiative of their lender or the result of government regulation. The results show that delinquent borrowers who are offered a debt moratorium by their lender are 4 percentage points (7 percent) less likely to default on their loan, while forbearance has no effect on repayment if it is granted by the regulator. Borrowers who are offered forbearance by their lender also have causally higher demand for future interactions with the lender: in a follow-up experiment conducted several months after the main intervention demand for a non-credit product offered by the lender is 10 percentage points (27 percent) higher among customers who were offered repayment flexibility by the lender than among customers who received a moratorium offer presented as an initiative of the regulator. Overall, the results suggest that, rather than generating moral hazard, debt forbearance can improve loan repayment and support the creation of longer-term banking relationships not only for liquidity but also for relational contracting reasons. This provides a rationale for offering repayment flexibility even in settings where lenders are not required to provide forbearance. |
| Date: | 2023–03–10 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10358 |
| By: | Ansar, Saniya; Klapper, Leora; Singer, Dorothe |
| Abstract: | This paper examines global data on unbanked and underbanked consumers to highlight the role that improved financial literacy and capability could play in motivating and enabling the safe and beneficial use of financial services. The paper uses data from Global Findex, a demand-side survey on ownership and use of accounts at formal financial institutions. The paper reviews the self-reported barriers to account ownership and use cited by unbanked adults, and identifies the challenges faced by account owners who could not use an account without help. Together, these issues point to the importance of financial education to improve digital and financial literacy skills, in addition to product design that considers customer abilities, and strong consumer safeguards to ensure that customers benefit from financial access. |
| Date: | 2023–03–07 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10345 |
| By: | Mekki Hamdaoui; Abderraouf Ben Ahmed Mtiraoui (MOFID-Université de Sousse); Zohra Aroussi; Mounir Smida |
| Abstract: | this paper aims to assess the nature of the link between financial and economic crises. to do this, we develop a continuous measure for crisis probability. the methodology employed distinguishes short-from long-term relationships, enhancing the analysis's depth and fortifying the results for autoregressive processes. the study addresses endogeneity and potential simultaneity between different crises using a sample of 49 developed and emerging countries spanning 1984-2016. the empirical investigation incorporates a simultaneous equation, Bayesian Model averaging (BMa) approach, a Panel autoregressive Vector (P-VecM), an autoregressive Distributed lag (arDl) technique, as well as Fully Modified ols (FMols) and Dynamic ols (Dols) methods. Findings indicate that while all crisis types may stem from unfavorable conditions, there exists a time lag in triggering and duration. specifically, economic crises tend to be more persistent and are typically preceded by financial crises. Granger-causality test results support a robust bidirectional causality between financial and real difficulties, with the financial sector influencing the real economy more significantly. Moreover, the study reveals that the impact of economic volatility on financial stability is transient and lacks long-term significance. conversely, the effect of a financial crisis on the real economy is enduring and remains significant in the long run. additionally, exchange market volatility emerges as a crucial determinant for both financial and economic crises.IMPACT STATEMENT our interest in this paper is to focus in the interdependency between economic and financial spheres. in particular, we aim to participate in the construction of a supervisory platform for politicians and policymakers by sequencing the triggering order of any fragility both in financial or real sectors and specifying potential transmission channels. the idea is to increase preventive actions to reduce likelihood of systemic crises by quickly acting to separate the two spheres and reduce possible contagion. |
| Keywords: | Financial and economic crises Bayesian model averaging Markov switching approach P-VecM arDl FMols and Dols, Financial and economic crises, Bayesian model averaging, Markov switching approach, P-VecM, arDl, FMols and Dols |
| Date: | 2025–02–07 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04950052 |
| By: | Jan Fialkowski; Christian Diem; Andr\'as Borsos; Stefan Thurner |
| Abstract: | Supply chain disruptions constitute an often underestimated risk for financial stability. As in financial networks, systemic risks in production networks arises when the local failure of one firm impacts the production of others and might trigger cascading disruptions that affect significant parts of the economy. Here, we study how systemic risk in production networks translates into financial systemic risk through a mechanism where supply chain contagion leads to correlated bank-firm loan defaults. We propose a financial stress-testing framework for micro- and macro-prudential applications that features a national firm level supply chain network in combination with interbank network layers. The model is calibrated by using a unique data set including about 1 million firm-level supply links, practically all bank-firm loans, and all interbank loans in a small European economy. As a showcase we implement a real COVID-19 shock scenario on the firm level. This model allows us to study how the disruption dynamics in the real economy can lead to interbank solvency contagion dynamics. We estimate to what extent this amplifies financial systemic risk. We discuss the relative importance of these contagion channels and find an increase of interbank contagion by 70% when production network contagion is present. We then examine the financial systemic risk firms bring to banks and find an increase of up to 28% in the presence of the interbank contagion channel. This framework is the first financial systemic risk model to take agent-level dynamics of the production network and shocks of the real economy into account which opens a path for directly, and event-driven understanding of the dynamical interaction between the real economy and financial systems. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.17044 |
| By: | Islam, Asif Mohammed; Rodriguez Meza, Jorge Luis |
| Abstract: | This study develops a measure of firm-level credit constraints by leveraging refinements in survey instruments for a widely used database. Using data on more than 65, 000 firms across 109 economies, the study uncovers several insights. Around 30 percent of firms in the formal private sector are credit constrained. Firms that are credit-constrained tend to be smaller and negatively correlated with performance. The more developed the economy, the lower the share of credit-constrained firms. One striking finding is that 52 percent of firms do not apply for loans as they have sufficient credit. For some economies, this may be more indicative of poor opportunities for the expansion of firms and thus the lack of demand for credit. The findings suggest that for policies that improve access to credit to be effective, they should go hand in hand with interventions that provide opportunities for firms to expand. |
| Date: | 2023–06–26 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10502 |
| By: | di Giovanni, Julian; Garcia Santana, Manuel Jose; Jeenas, Priit; Moral Benito, Enrique; Pijoan-Mas, Josep |
| Abstract: | This paper provides a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. It builds a novel panel dataset for Spain that merges public procurement data, credit register loan data, and quasi-census firm-level data. The paper provides evidence consistent with the hypothesis that procurement contracts act as collateral for firms and help them grow out of their financial constraints. The paper then builds a model of firm dynamics with asset- and earnings-based borrowing constraints and a government that buys goods and services from private sector firms, and uses it to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. The findings show that policies which promote the participation of small firms have sizeable macroeconomic effects, but the net impact on aggregate output is ambiguous. While these policies help small firms grow and overcome financial constraints, which increases output in the long run, these policies also increase the cost of government purchases and reduce saving incentives for large firms, decreasing the effective provision of public goods and output in the private sector, respectively. The relative importance of these forces depends on how the policy is implemented and the type and strength of financial frictions. |
| Date: | 2023–07–24 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10522 |
| By: | Di Filippo, Mario; Panizza, Ugo G. |
| Abstract: | This paper uses a unique dataset with matched information at the firm-bank level covering 13, 000 firms and 550 banks in 36 emerging and developing economies over 2012–20. The analysis tests whether government-owned banks fulfill their social mandate by targeting credit constrained firms or firms that are more likely to generate positive externalities. The findings show that credit constrained firms are more likely to borrow from government-owned banks, and that this is especially the case in countries with good institutions. However, the paper does not find any evidence that government-owned banks target innovative firms or “green” firms. The findings show that in firms that borrow from government-owned banks, employment reacts less to business cycle conditions relative to firms that borrow from private banks. The paper further shows that employment is more stable in credit constrained firms that have a relationship with a government-owned banks with respect to credit constrained firms that borrow from a private bank. |
| Date: | 2023–03–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10384 |
| By: | De Nicola, Francesca; Melecky, Martin; Iootty De Paiva Dias, Mariana |
| Abstract: | This paper studies the effect of bank ownership on product innovation by borrowing firms, highlighting the role of the state, foreign, and combined foreign-state bank ownership. It uses Enterprise Survey data for more than 22, 000 firms in 49 countries from 2016 to 2020, linked to Fitchconnect data on banks: their ownership, soundness indicators, and legal origins. The paper confirms that a firm's access to bank credit is associated with a greater probability of product innovation, even when adjusting for possible reverse causality. If the credit is provided by a state-owned bank, the probability that the borrowing firm will innovate increases. The analysis does not find a similarly positive effect for foreign bank ownership. But when considering the combined effect of foreign state ownership, the results are most statistically and economically significant. Although the results ma y not be extendable to research and development spending (a key input to innovation), the findings show that foreign state banks can serve as an additional financing vehicle to stimulate radical innovation alongside equity financiers. |
| Date: | 2023–05–30 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10458 |
| By: | Cull, Robert J.; Goh, Chorching; Xu, L. Colin |
| Abstract: | Trade credit remains an important source of finance for firms in developing countries and many firms in developed countries, especially those that are young, small, or informationally opaque for other reasons. This paper summarizes the literature and explains the pervasiveness of trade credit, detailing its potential advantages over formal credit in terms of the information that buyers and sellers have about each other and their ability to monitor one another. Because it requires less formal contract enforcement, trade credit can be especially relevant where the rule of law and the legal system are weak. At the same time, reliance on information from social networks and informal institutional arrangements limits the scale of trade credit, and thus moderate improvements to formal enforcement can expand trade credit beyond social networks and enable customers to switch suppliers, which improves their credit terms. The patterns suggest a sweet spot or “Goldilocks” region where mid-size firms and those in countries at middling levels of development tend to rely relatively more heavily on trade credit than others. Going forward, detailed data on the relationship between suppliers and customers are crucial to enable more direct tests of theoretical predictions regarding trade credit. |
| Date: | 2023–06–05 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10468 |
| By: | Calice, Pietro |
| Abstract: | Access to finance is a key obstacle for the growth and development of small and medium-sized enterprises in fragile and conflict affected situations. This paper provides empirical evidence on the key macrofinancial and institutional drivers of financial inclusion of small and medium-sized enterprises in a large sample of countries, highlighting the comparative importance of factors affecting countries with and without fragile and conflict affected situations. The results show that macroeconomic and institutional stability, along with reduced informality, banking sector soundness, and improved credit information environment, are associated with higher financial inclusion of small and medium-sized enterprises. The results also show that strengthening the rule of law, government effectiveness, and control of corruption while increasing financial depth and reducing public sector borrowing and banking market concentration could help close the small and medium-sized enterprise financial inclusion gap between fragile and conflict affected situation countries and the best performing countries. These effects are generally stronger in middle-income countries with fragile and conflict affected situations than in low-income countries with fragile and conflict affected situations. The results point to the importance of adopting comprehensive macrofinancial and institutional strategies to improve financial inclusion of small and medium-sized enterprises in countries with fragile and conflict affected situations, tailoring reforms to country contexts. |
| Date: | 2023–03–14 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10363 |
| By: | Jaud, Melise; Kukenova, Madina; Strieborny, Martin |
| Abstract: | Banks and stock markets play distinct roles in helping exporters survive in foreign markets, conditional on the specific financial needs of exported products. Stock markets rather than banks help exporters who lack easily collateralizable tangible assets. Active rather than large stock markets promote exports of products requiring high levels of working capital. And the trade credit can act as a substitute for external financing only from banks and only in the presence of well-established export links. These results on product-level export survival provide new insights into the transmission process from finance to the real economy. |
| Date: | 2023–04–11 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10403 |
| By: | Rufai, Aliyu; Udaah, Isaiah; Salisu, Afees |
| Abstract: | This study utilizes a newly constructed index for financial stress to examine its predictive value for exchange rate volatility in sub-Saharan Africa (SSA). Using a methodology that accounts for the key features of the predictive model, we find that financial stress significantly and positively affects exchange rate volatility in SSA. This indicates that increased financial stress is linked to higher levels of exchange rate volatility in the region. A robustness check conducted on OECD countries shows that financial stress does not elevate exchange rate volatility in those countries. These findings support the purchasing power parity (PPP) theory in SSA, where financial stress amplifies exchange rate fluctuations, whereas in OECD countries, the effects are weaker and less statistically significant. In light of these findings, policymakers in sub-Saharan Africa should prioritize enhancing the financial system stability to better protect against external shocks. |
| Keywords: | Exchange rate volatility; Financial stress; Sub-Saharan Africa; Purchasing power parity |
| JEL: | C58 D53 G15 |
| Date: | 2023–12–23 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:123573 |
| By: | Elie BOLA BOONGO (UNIKIS - Université de Kisangani) |
| Abstract: | This article examines the challenges of adopting cryptocurrency as legal tender in the Central African Republic (CAR). Cryptocurrencies, which rely on blockchain technology, are decentralized digital currencies that emerged after the subprime mortgage crisis. The global market for these assets is now valued at over $2 trillion. In Africa, the volume of cryptocurrency transactions increased by 1200% between 2018 and 2021, reflecting a growing interest in digital assets. In response, several African countries, including Nigeria, Ghana, and South Africa, are exploring central bank-issued digital currency projects. However, reactions to cryptocurrencies across Africa vary: some countries, like Egypt, have banned them, while others have taken a more open approach.In the Central African Economic and Monetary Community (CEMAC), the Bank of Central African States (BEAC) has expressed concerns about the security of cryptocurrencies and their impact on the banking sector. The CAR's adoption of Bitcoin as official currency in 2022 prompted responses from the BEAC, which recommended conducting a prior study before introducing a central bank digital currency to avoid disrupting the existing economy. Despite these concerns, this initiative in the CAR is seen as a way to open new economic opportunities and promote inclusive growth.The article, however, warns of the risks associated with the lack of a regulatory framework for cryptocurrencies in the CAR. Without regulation, the monetary and banking system, as well as consumers, face various dangers, including extreme volatility of cryptocurrencies, scams, and criminal activities such as money laundering and terrorist financing. It emphasizes the urgent need to regulate this sector to protect users and stabilize the financial system, while also strengthening the capabilities of financial oversight authorities to address the challenges posed by these digital assets. |
| Abstract: | Cet article examine les enjeux de l'adoption de la cryptomonnaie comme monnaie légale en République Centrafricaine (RCA). Les cryptomonnaies, qui reposent sur la technologie blockchain, sont des monnaies numériques décentralisées apparues après la crise des subprimes. Leur marché global est désormais évalué à plus de 2000 milliards de dollars. En Afrique, le volume des transactions en cryptomonnaies a augmenté de 1200% entre 2018 et 2021, témoignant d'un intérêt croissant pour ces actifs numériques. En réponse, plusieurs pays africains, comme le Nigeria, le Ghana et l'Afrique du Sud, explorent des projets de monnaies digitales émises par leurs banques centrales. Cependant, les réactions face aux cryptomonnaies en Afrique varient: certains pays, tels que l'Égypte, les interdisent, tandis que d'autres adoptent une approche plus ouverte. Dans la Communauté Économique et Monétaire de l'Afrique Centrale (CEMAC), la Banque des États de l'Afrique Centrale (BEAC) a exprimé des inquiétudes concernant la sécurité des cryptomonnaies et leurs répercussions sur le secteur bancaire. L'adoption du Bitcoin par la RCA comme monnaie officielle en 2022 a déclenché des réactions de la BEAC, qui recommande une étude préalable avant l'introduction d'une monnaie numérique de banque centrale afin de ne pas perturber l'économie existante. Malgré ces préoccupations, en RCA, cette initiative est perçue comme un moyen d'ouvrir de nouvelles perspectives économiques et de promouvoir une croissance inclusive. L'article met toutefois en garde contre les risques liés à l'absence de cadre réglementaire pour les cryptomonnaies en RCA. Sans réglementation, le système monétaire et bancaire, ainsi que les consommateurs, sont exposés à divers dangers, notamment la volatilité extrême des 1 Chercheur indépendant en économie monétaire, financière et internationale, doctorant en sciences économiques à l'université de Kisangani. cryptomonnaies, les arnaques et les activités criminelles, telles que le blanchiment d'argent et le financement du terrorisme. Il souligne l'urgence de réguler ce secteur pour protéger les utilisateurs et stabiliser le système financier, tout en renforçant les capacités des autorités de surveillance financière afin de faire face aux défis posés par ces actifs numériques. |
| Keywords: | Cryptomonnaie, Monnaie Légale, Monnaie Numérique Banque Centrale, Bitcoin Crypto-Currency, legal tender, Central Bank Digital Currency, Bitcoin |
| Date: | 2023–10–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04909680 |
| By: | Rzayev, Khaladdin; Sakkas, Athanasios; Urquhart, Andrew |
| Abstract: | The network effect, measured by users’ adoption, is considered an important driver of cryptocurrency market dynamics. This study examines the role of adoption timing in cryptocurrency markets by decomposing total adoption into two components: innovators (early adopters) and imitators (late adopters). We find that the innovators’ component is the primary driver of the association between user adoption and cryptocurrency returns, both in-sample and out-of-sample. Next, we show that innovators’ adoption improves price efficiency, while imitators’ adoption contributes to noisier prices. Furthermore, we demonstrate that the adoption model captures significant cryptocurrency market phenomena, such as herding behaviour, more effectively, making it better suited for forecasting models in cryptocurrency pricing. These results suggest that our methodology for linking early and late adopters to market dynamics can be applied to various domains, offering a framework for future research at the intersection of operational research and financial markets. |
| Keywords: | cryptocurrency adoption; imitators; innovators; market quality; network effects; predictive modelling |
| JEL: | F3 G3 |
| Date: | 2025–05–16 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:126508 |
| By: | Manogna R. L.; Nishil Kulkarni |
| Abstract: | The financialization of agricultural commodities and its impact on food security has become an increasing concern. This study empirically investigates the role of financialization in global food markets and its policy implications for a stable and secure food system. Using panel data regression models, moderating effects models, and panel regression with a threshold variable, we analyze wheat, maize, and soybean futures traded on the Chicago Board of Trade. We incorporate data on annual trading volume, open interest contracts, and their ratio. The sample consists of five developed countries (United States, Australia, Canada, France, Germany) and seven developing countries (China, Russia, India, Indonesia, Brazil, Vietnam, Thailand), covering the period 2000 to 2021. The Human Development Index (HDI) serves as a threshold variable to differentiate the impact across countries. Our findings indicate that the financialization of agricultural commodities has negatively affected global food security, with wheat and soybean showing a greater adverse impact than maize. The effects are more pronounced in developing countries. Additionally, we find that monetary policy has the potential to mitigate these negative effects. These results provide insights for policymakers to design strategies that ensure a secure and accessible global food supply. |
| Date: | 2025–02 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2502.05560 |
| By: | Kiril Simeonovski (Independent Researcher); Igor Sazdovski (Independent Researcher); Filip Fidanoski (GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur) |
| Date: | 2025–01–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-04964117 |
| By: | Nie, Ou; Regelink, Martijn Gert Jan; Wang, Dieter |
| Abstract: | Climate change and environmental risks are increasingly recognized as a concern for financial authorities, yet empirical evidence of the damage for bank balance sheets is relatively scant. This paper provides preliminary estimates of the aggregate impact of physical risks from climate and environmental-related natural disasters on bank balance sheets across 184 countries over nearly 40 years. Using the local projection method, the analysis finds that severe disaster episodes lead to an increase in the level of systemwide non-performing loans, which is persistent over time. The paper complements the cross-country results with a country-specific example, which finds that typhoon damages lead to a significant increase in non-performing loans in the Philippines between 2011 and 2018. The results suggest a role for financial policy and supervision to monitor, assess, and mitigate climate and environmental related physical risks to the banking sector. |
| Date: | 2023–02–28 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10326 |
| By: | Calice, Pietro; Diaz Kalan, Federico Alfonso; Dunz, Nepomuk Max Ferdinand; Miguel Liriano, Faruk |
| Abstract: | Economic activity depends on a flourishing biodiversity and intact environment through the provision of ecosystem services. The depletion of these services poses physical risks for the financial sector. This paper attempts to measure the potential exposure of the banking systems in 20 emerging markets to nature loss through their lending portfolio. The results show that banks in emerging markets allocate around half of their credit portfolio to firms whose business processes are highly or very highly dependent on one or more ecosystem services. The results also provide initial and preliminary evidence that points to a negative correlation between country income level and dependency on ecosystem services. Accounting for indirect dependencies on ecosystem services via supply chains and trade could change this observed relationship, however. Furthermore, the highest dependencies on ecosystem services across countries tend to be on climate regulation and flood and storm protection, indicating the interconnectedness of climate change and nature loss. |
| Date: | 2023–05–02 |
| URL: | https://d.repec.org/n?u=RePEc:wbk:wbrwps:10432 |