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on Financial Development and Growth |
| By: | Pascal Kulu Mulindwa (Dschang school of Economics and Management University of Dschang (Cameron)); Paul Ningaye (Faculty of Economics and Management University of Dschang (Cameron)); Alain Kikandi Kiuma (ULPGL/GOMA - Faculty of Economics and Management Université Libre des Pays des Grands Lacs Goma (D.R. Congo)) |
| Abstract: | While existing literature has extensively documented the direct effects of financial development on inclusive growth, the mediating and moderating roles of institutional transaction costs remain largely unexplored within the African context. This study examines the role of institutional transaction costs in transmitting the effects of financial development to inclusive growth in Africa. Using a panel data model covering 53 African countries over the period 2003–2021, the results, obtained through various econometric techniques and robustness tests to address potential endogeneity, reveal that financial development positively and significantly influences inclusive growth, with a GMM coefficient of 0.2727. However, this relationship remains fragile in the African context. The analysis of indirect effects demonstrates that institutional transaction costs serve not only as a transmission channel (mediator), as the Sobel test yields a positive and significant mediation coefficient of 0.009, representing 14% of the total effect, supported by the bootstrap result showing a robust bias-corrected confidence interval (BC) with positive values ranging from 0.0003 to 0.1253, but also as an amplifier (moderator) of the impact of financial development on inclusive growth. Although the Driscoll-Kraay estimation for moderation shows a positive and significant coefficient of 0.6213, it lacks the robustness required to produce a uniform effect across all African countries. Consequently, African governments should implement policies aimed at reducing institutional transaction costs to ensure more effective and inclusive growth. |
| Abstract: | Si la littérature existante a largement documenté les effets directs du développement financier sur la croissance inclusive, le rôle médiateur et modérateur des coûts de transaction institutionnels reste largement inexploré dans le contexte africain. Cette étude examine le rôle de ces coûts dans la transmission des effets du développement financier sur la croissance inclusive en Afrique. À l'aide d'un modèle de données de panel couvrant 53 pays africains sur la période 2003-2021, les résultats, obtenus grâce à diverses techniques économétriques et à des tests de robustesse visant à traiter l'endogénéité potentielle, révèlent que le développement financier influence positivement et significativement la croissance inclusive (coefficient GMM de 0, 2727). Cependant, cette relation demeure fragile dans le contexte africain. L'analyse des effets indirects démontre que les coûts de transaction institutionnels servent non seulement de canal de transmission (médiateur), le test de Sobel donnant un coefficient de médiation positif et significatif de 0, 009, représentant 14 % de l'effet total appuyé par le résultat du bootstrap présentant un intervalle de confiance corrigé du biais (BC) est robuste et présente les valeurs positives s'établissant entre 0, 0003 et 0, 1253. mais aussi d'amplificateur (modérateur) de l'impact du développement financier sur la croissance inclusive. Bien que l'estimation de Driscoll-Kraay pour la modération affiche un coefficient positif et significatif de 0, 6213, elle manque de robustesse pour produire un effet uniforme dans tous les pays africains. Par conséquent, les gouvernements africains devraient mettre en œuvre des politiques visant à réduire les coûts de transaction institutionnels afin de garantir une croissance plus efficace et inclusive. |
| Keywords: | Panel data, Africa, Mediation analysis, Governance. Classification JEL : D23, O16, G20, O43, financial intermediation, Institutional transaction costs, Inclusive growth, Inclusive growth Institutional transaction costs financial intermediation Panel data Africa Mediation analysis Governance. Classification JEL : D23 O16 G20 O43 |
| Date: | 2026–04–09 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05588235 |
| By: | Malick Paul Ndiaye (UADB - Université Alioune Diop de Bambey); Souleymane Ado Kanta (UADB - Université Alioune Diop de Bambey) |
| Abstract: | Résumé : Cette étude examine l'effet de la stabilité politique, de l'ouverture commerciale et de leur interaction sur le développement financier en Afrique subsaharienne. L'étude porte sur des données de panel, constituée de 40 pays d'Afrique subsaharienne (ASS) sur une période de vingt-huit ans allant de 1995 à 2022. Le modèle dynamique par la méthode des moments généralisés GMM (General Method of Moment) en système de Blundel et Bond (1998) est utilisé pour mener l'étude. Les résultats montrent que la stabilité politique et absence de violence (SPeAV) exerce un effet négatif et significatif sur le crédit au secteur privé, tandis que l'ouverture commerciale (lOuvC) influe positivement et significativement. L'interaction entre stabilité politique et ouverture commerciale (SP_OC) est également positive et significative, indiquant que la stabilité politique devient favorable au développement financier lorsqu'elle est associée à une plus grande ouverture commerciale. Les tests de robustesse par revenu et région confirment la solidité de ces résultats. L'étude suggère que les politiques publiques devraient combiner stabilité politique, ouverture commerciale et promotion du secteur agricole pour stimuler le financement privé et soutenir une croissance durable. Mots clés : Stabilité politique, Ouverture commerciale, Développement financier, Modèle dynamique, interaction. Abstract : This study examines the effect of political stability, trade openness, and their interaction on financial development in Sub-Saharan Africa. The analysis is based on panel data covering 40 Sub-Saharan African countries over a twenty-eight-year period from 1995 to 2022. The study employs a dynamic model estimated using the system Generalized Method of Moments (GMM) approach of Blundell and Bond (1998). The results show that political stability and absence of violence (SPeAV) have a negative and significant effect on private sector credit, while trade openness (lOuvC) has a positive and significant impact. The interaction between political stability and trade openness (SP_OC) is also positive and significant, indicating that political stability becomes favorable to financial development when combined with greater trade openness. Robustness tests by income level and region confirm the reliability of these findings. The study suggests that public policies should combine political stability, trade openness, and promotion of the agricultural sector to stimulate private financing and support sustainable growth. Keywords : Political stability, Trade openness, Financial development, Dynamic model, interaction. |
| Keywords: | O55 Paper type : Empirical Research, Stabilité politique Ouverture commerciale Développement financier Modèle dynamique interaction. JEL Classification : E44 G21 O16 O55. Type du papier : Recherche empirique Political stability Trade openness Financial development Dynamic model interaction. Classification JEL : E44 G21 O16 O55 Paper type : Empirical Research, Stabilité politique, Ouverture commerciale, Développement financier, Modèle dynamique, interaction. JEL Classification : E44, interaction. Classification JEL : E44, Dynamic model, Financial development, Trade openness, O55. Type du papier : Recherche empirique Political stability, O16, G21 |
| Date: | 2025–12–19 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05583578 |
| By: | Albers, Thilo Nils Hendrik; Kersting, Felix; Stieglitz, Timo |
| Abstract: | This paper studies how industrialization shaped wealth, its distribution, and elite composition in Prussia, using novel county wealth-tax records and individual-level millionaire data. To identify the effect of industrialization, we instrument industrial employment with proximity to carboniferous strata. More industrialized counties were wealthier, but the gains mainly accrued to the top 1 percent; they were also more unequal and less dominated by nobles at the top. Millionaire-level returns by asset type reveal a rate-of-return mechanism behind rising wealth concentration: industrial wealth earned higher, more dispersed, and scale-dependent returns than agricultural wealth. Differential entry into industrial ownership drove elite turnover. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21362 |
| By: | Mr. Luis Brandão-Marques; Mr. Damien Capelle; Mr. Diego A. Cerdeiro; Adriano Fernandes; Alexandra Fotiou; Yueling Huang; Claire Li; Rui Mano; Mr. Alberto Musso; Ese Onokpasa; Mr. Richard Varghese; Maryam Vaziri |
| Abstract: | Persistent fragmentation and limited depth in EU financial markets constrain firm growth, innovation, and cross-country risk sharing. This Staff Discussion Note documents policy-induced barriers that impede cross-border bank lending and suppress the scale of venture capital, alongside broader real-sector frictions that restrict the amount of investable projects. Obstacles examined in the Note include heterogeneity in banking regulation and safety nets (notably deposit insurance), as well as insolvency regimes, and rules limiting the provision and allocation of risk capital by pension funds and insurers. Financial reforms could raise long-run EU GDP by about 3 percent, with two-thirds from deeper banking integration and the remainder from reducing cross-border barriers to and expanding the supply of risk-capital. In addition, these financial reforms would magnify by an additional percentage point of GDP the gains from a broader set of domestic structural reforms that improve business dynamism and innovation. Smaller EU economies and younger firms benefit disproportionately. |
| Keywords: | Banking union; capital markets union; cross-border banking; venture capital; capital allocation; firm growth; risk-sharing |
| Date: | 2026–06–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfsdn:2026/002 |
| By: | Nikolaj Broberg; Luca Marcolin; Elettra Sartori |
| Abstract: | Business investment has weakened across OECD economies in recent decades. Using firm-level data for 17 OECD countries over 2003–2022, this paper documents a marked decline in the responsiveness of tangible investment to firm productivity following the Global Financial Crisis, with only a partial recovery thereafter, pointing to a weakening of capital reallocation toward more productive firms. The decline is broad-based across countries and sectors, holds after accounting for intangible investment, and is confirmed under an instrumental-variables strategy. Both frontier and non-frontier firms experienced a reduction in responsiveness, though the decline is larger and more persistent among non-frontier firms, while frontier firms proved more resilient. Partial-equilibrium counterfactuals suggest that maintaining pre-crisis responsiveness would translate into substantially higher aggregate investment and measurable productivity gains. Policy and market conditions shape how strongly investment responds to productivity. Responsiveness is weaker in sectors where firms depend more on external finance and in countries with less efficient insolvency regimes, the latter most apparent at the frontier. More concentrated markets are associated with lower responsiveness, particularly among non-frontier firms, whereas greater trade openness is associated with stronger responsiveness across the productivity distribution. |
| Keywords: | Business dynamism, Cross-country firm-level data, Frontier firm divergence, Investment responsiveness, Multifactor productivity, Tangible investment |
| JEL: | C23 C55 D22 D24 E22 O47 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaac:40-en |
| By: | Görg, Holger; Mao, Haiou; Driffield, Nigel |
| Abstract: | Divestments by foreign multinationals are an important phenomenon that is largely neglected in the literature. We use firm‐level panel data from China to estimate the impact of such divestments on the performance of domestic firms in the local economy. To the best of our knowledge, there is no empirical study that has looked at these effects. Our results suggest that, overall, domestic firms may be able to benefit from divestments by foreign firms through spillovers. We find evidence suggesting that the positive overall effect for private firms is driven by the movement of workers from the divested firm to the local firm, as well as by a reduction in competition reducing crowding out. By contrast, local firms are negatively affected by the loss of technology transfer and customer–supplier relationships with foreign firms. While most effects are short‐lived, the negative impact on technology transfer persists over time. |
| Keywords: | foreign divestment, multinational enterprises, spillovers |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:335592 |
| By: | Wafae Amrani (UM5R - Université Mohammed V de Rabat – Faculté des Sciences Juridiques, Économiques et Sociales – Souissi); Saad Elouardirhi (UM5R - Université Mohammed V de Rabat – Faculté des Sciences Juridiques, Économiques et Sociales – Souissi) |
| Abstract: | Déclaration de divulgation :Les auteurs n'ont pas connaissance de quelconque financement qui pourrait affecter l'objectivité de cette étude. Ils assument l'entière responsabilité de tout éventuel plagiat, de l'usage de l'intelligence artificielle dans la rédaction, ainsi que des résultats présentés dans cet article. Conflit d'intérêts :Les auteurs ne signalent aucun conflit d'intérêts. |
| Keywords: | C32 Type du papier : Recherche empirique Financial decentralization, C32 Paper type: Empirical Research, Morocco. Classification JEL: H7, Economic growth, O1, H2, Maroc. JEL Classification : H7, VAR, Croissance économique, Décentralisation financière, Décentralisation financière Croissance économique VAR Maroc. JEL Classification : H7 H2 O1 C32 Type du papier : Recherche empirique Financial decentralization Economic growth VAR Morocco. Classification JEL: H7 H2 O1 C32 Paper type: Empirical Research |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05528506 |
| By: | Gabriele Camera (ESI, Chapman University); Gary Charness (UC Santa Barbara); Nir Chemeya (Ben-Gurion University of the Negev) |
| Abstract: | The future architecture of financial systems is a subject of contention, with centralized and decentralized governance proponents. Here we ask: would the architecture affect the quality of decision-making? We propose a game where financial network participants demarcate the ownership of claims to income. This governance task can be decentralized (shared authority), centralized (single authority), or hybrid (alternating authority). Without communication all architectures supported poor outcomes. With communication, decentralization ensured good governance and maximum profits, while centralization did not—lowering communication’s potency in promoting socially optimal decisions. This indicates there is scope for decentralization in innovating financial institutions. |
| Keywords: | decentralized finance, distributed networks, money, fintech, group decisionmaking, digital payments, currency design, validation, trusted parties |
| JEL: | D81 G3 G4 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:chu:wpaper:26-06 |
| By: | Gambetti, Luca; Petrella, Ivan; Pollastri, Alessandro; Santoro, Emiliano |
| Abstract: | We investigate the business-cycle anatomy of emerging and developing economies (EMDEs) and find that their dominant cyclical shock is global in origin but supply-like in transmission. The shock is closely related to global risk conditions and movements in export and import prices. It generates broad expansions, raises total factor productivity, and does not increase inflation. Yet its footprint is concentrated at business-cycle rather than low frequencies, so the productivity-like behavior of EMDE cycles is not evidence that the dominant shock is a primitive technology or trend shock. We rationalize the evidence through a mechanism that links global financial easing to cross-firm reallocation: lower working-capital costs benefit more productive firms disproportionately, shift resources toward them, generate procyclical total factor productivity, and amplify aggregate activity. The results identify a supply-side channel of global-financial-cycle transmission in EMDEs. |
| Keywords: | Emerging markets; Business cycles; Global financial cycle; Financial frictions; Misallocation |
| JEL: | E32 F41 F44 E44 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21536 |
| By: | Jing Zhang (Okayama University); Takao Asano (Okayama University); Akihisa Shibata (Osaka University of Economics); Masanori Yokoo (Okayama University) |
| Abstract: | Asset price volatility, characterized by episodic booms and busts, is a prominent feature of real economies. To explain these phenomena, most existing literature has relied on bounded rationality or exogenous shocks. This paper studies land price dynamics within a rational agent general equilibrium model that incorporates endogenous technology choice. Entrepreneurs choose between a Leontief technology and a linear technology so as to maximize firm value, based on their relative productivity, but they can only observe the current land price with some noise. This informational friction results in probabilistic mixing of technology choices, leading to a continuous nonlinear land pricing map. We demonstrate that, under parameter restrictions that yield the Markov property, the resulting map exhibits observable chaos, and its invariant densities can be characterized analytically. |
| Keywords: | Asset bubbles; Technology choice; Markov property; Chaotic dynamics |
| JEL: | C61 G12 O33 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:kyo:wpaper:1128 |
| By: | Ray Barrell; Shama Bernard; Dilruba Karim; Iana Liadze |
| Abstract: | This paper investigates the causes of crises over the post war period in 14 OECD economies. We look first at the definition of crises and survey the literature on the links between credit growth and crises over the last 100 years or so. We then examine the determinants of financial crises in market economies, stressing the roles of bank capital, banking structure, property prices and current account deficits in the post Bretton Woods era. We look at the role of credit growth in crisis determination and note that it is present in the post Bretton Woods era. We argue that increases in capital ratios would systematically reduce the risk of crisis incidence in market economies over the next few years. We test for the interaction between capital and bank cash in the determination of crises, and the causality between house price growth and credit growth. A longer‐term analysis of the post‐war period is undertaken, and our core results on the importance of bank capital reserves are upheld. |
| Keywords: | Financial Stability, Banking Crises, Macroprudential Policy |
| JEL: | E44 G01 G18 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:nsr:niesrd:579 |
| By: | Albers, Thilo Nils Hendrik; Nützenadel, Alexander; Scheib, Tobias |
| Abstract: | The regulatory cycle view suggests that periods of deregulation encourage increased risk-taking, which in turn leads to financial crises and subsequent re-regulation. To test this proposition, we develop a novel 10-item index capturing prudential and structural banking regulation across 14 countries over the past century. We find that deregulation is indeed associated with heightened risk appetite and credit expansion. However, the regulatory response to financial crises has changed significantly over time. Consistent with the financial trilemma, the evidence suggests that the cycle has weakened, as open capital accounts are increasingly incompatible with effective regulation at the national level. |
| JEL: | F68 G18 G28 N10 N40 |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21419 |
| By: | Eric Tymoigne |
| Abstract: | Private debt and equity markets have been a funding source for nascent and credit constrained businesses for several decades. Following the 2008 financial crisis, an economic environment characterized by low interest rates, cautious banks, and tighter financial regulations--together with money managers on the hunt for higher yielding assets--provided a fertile ground for the rapid growth of the private debt market. The defaults of two major borrowers in 2025, the growing concerns about the sustainability of AI businesses, and the ongoing wave of redemption requests, have all led to worries that private markets may be a source of financial instability. The current dominant view has brushed these worries aside by arguing that the private debt market is small, that private debt deals have a lot of equity buffer (leverage is low), that covenants attached to private debt allow for the quick correction of problems in a way that promotes the long-term success of businesses, and that low default rates reflect the inherent soundness of private markets. This paper challenges such a narrative. Private markets are major contributors to the growth and spread of financial fragility. The financial practices that preceded the Great Recession are once again becoming more common: loose underwriting and credit rating; the growing use of interest refinancing; the growing use of opaque asset-pricing methods; the rise of financial engineering that hides leverage, embeds leverage, and generates ephemeral liquidity; and a policy environment that promotes deregulation, desupervision, and deenforcement. Together with the growing interdependence between private debt markets, private equity markets, banks, and money managers, these dangerous financial practices generate a financial environment in which fraud can grow quickly and financial instability can materialize. |
| Keywords: | Financial instability; money managers; Ponzi finance; private credit |
| JEL: | E42 G01 G23 G24 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1117 |
| By: | Christopher Kennedy |
| Abstract: | This paper explains the mechanisms by which a major energy transition produced the US Great Depression. Stock market indices show the 1927-29 Wall Street Bubble was led by petroleum-based technologies--especially airplanes and agricultural machinery. The subsequent crash was triggered by oil discovery. Tractors replacing 32 percent of horses over the course of the 1920s led to a 26 percent increase in the net available farmland for domestic consumption. The oversupply of land lowered farm prices, causing deflation. The deflation was non-uniform, with prices of coal, metals, and building materials--essential for capital formation--rising in real terms. Railroads had hegemonic control over transportation and energy supply; their decline, complicated by technological lock-in, undermined the US financial system, contributing to bank failures. Several statistical tests corroborate the energy transition hypothesis. |
| Keywords: | Great Crash; Wall Street Bubble; Deflation; Coal; Petroleum; Tractors; Airplanes; Railroads |
| JEL: | Q4 N1 N5 N7 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:lev:wrkpap:wp_1121 |
| By: | Birendra Bahadur Budha (Nepal Rastra Bank) |
| Abstract: | This paper investigates several questions about credit booms in Nepal: When do credit booms occur? What are the macroeconomic dynamics around the credit booms? What are the policy responses implemented to deal with credit booms? Using data for the period 1990-2025, I find that credit booms occur three times: 1994-1996, 2008- 2010, and 2020-2022. These booms are associated with financial sector reforms and loose monetary conditions for a longer period. Credit booms coincide with stock market booms and end up in external sector crises, with high current account deficits and low reserve adequacy. All three booms are bad ones, with subpar macroeconomic performance. During booms, credit reallocation shifts towards construction, consumable loans, and finance, which suffer most following the booms. Nepal Rastra bank responded with monetary and macroprudential measures to address the booms and external sector crisis during and after the booms. |
| Keywords: | credit booms, Nepal, macroeconomic dynamics |
| JEL: | E32 E51 E58 G01 |
| Date: | 2026–07–03 |
| URL: | https://d.repec.org/n?u=RePEc:nrb:wpaper:nrbwp202664 |
| By: | Tuncer, Ali Coskun |
| Abstract: | Using a monthly security-level dataset, this paper reconstructs market size, composition, and equity returns for Alexandria, Cairo, and Istanbul. By 1913, equity capitalization reached 40% of GDP in Egypt but 14% in Ottoman Turkey. Growth came through new issuance rather than price appreciation, while risk-adjusted returns were low. Istanbul returns co-moved more strongly with London, reflecting foreign-incorporated mining and banking firms linked to international capital markets, while Egypt’s larger market was concentrated in land and mortgage finance tied to its cotton economy. The findings show that legal regimes governing foreign capital shaped how peripheral exchanges interacted with global financial markets. |
| Keywords: | Stock market capitalization |
| JEL: | N25 G15 F65 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21520 |
| By: | Ifergane, Tomer; Ray, Walker; van der Beek, Karine; Farbman, Lior |
| Abstract: | Land titling is expected to expand credit by making land pledgeable, but isolating this collateral channel empirically is difficult. We utilize English enclosures from 1750-1830 as a laboratory: privatization of "common waste" created newly mortgageable land, in contrast with "open-field" enclosures which largely reorganized already titled arable land. A stylized model with endogenous default predicts that an influx of newly pledgeable waste land lowers equilibrium collateral requirements, generating a local credit expansion but an increase in bankruptcies. Using a newly digitized universe of personal bankruptcies from the London Gazette, we find that the enclosure of common waste led to higher bankruptcies, particularly in industrial areas and during downturns. Bankruptcies are concentrated among industrial occupations with tight cash-flow cycles. In contrast, enclosures of open-field reduce bankruptcies. The results clarify a key collateral channel through which property reforms can deepen credit while increasing defaults. |
| Keywords: | Enclosures; Bankruptcy |
| JEL: | E44 G21 G33 K11 N13 N23 O11 O16 O43 Q15 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21455 |
| By: | Erik Frohm; John Hooley; Fatih Ozturk; Łukasz Rawdanowicz; Nivetha Sivakumar |
| Abstract: | Current account imbalances have re-emerged in global policy debates amid renewed widening, persistence and trade tensions. This paper reviews stylised facts on global imbalances, lessons from past rebalancing episodes, and policy implications. It shows that global imbalances remain persistent and concentrated in a few economies, are shaped more by differences in saving than in investment, and that net international investment positions are strongly influenced by valuation and nominal growth effects. Deficit narrowing is typically accompanied by export growth and higher private saving‑investment balances, especially in firms, while surplus narrowing is more often associated with higher imports and lower net lending across sectors. Larger initial imbalances – especially deficits – are associated with a higher probability of subsequent narrowing. Overall, durable rebalancing is unlikely to be achieved through trade measures or any single policy instrument. Instead, it could benefit from domestically grounded reforms, including fiscal adjustment where needed, and structural measures to reduce excess saving and support investment. Stronger prudential oversight, especially of non-bank financial institutions, would mitigate financial risks. Industrial policy may affect trade balances for individual goods but is unlikely to durably alter aggregate current account positions. |
| Keywords: | global imbalances, current account, capital flows, industrial policy |
| JEL: | E20 F32 F41 |
| Date: | 2026–06–30 |
| URL: | https://d.repec.org/n?u=RePEc:oec:ecoaaa:1869-en |
| By: | Chenard, Antonin; Eichengreen, Barry; Monnet, Eric; Morvillier, Florian |
| Abstract: | We analyze an aspect of the international monetary system that has been the subject of little research: the distinction between foreign exchange reserves held as deposits and held as securities. We assemble new data for 109 countries in the period 1950-2022 based on previously unutilized statistics from central bank annual reports. We show that there has been movement since the late 1990s toward holding a larger share of reserves in the form of securities. Securities now account for almost two-thirds of total foreign exchange reserves, up from one-third a quarter century ago. This shift is concentrated in the decade between the emerging market crises of the late 1990s and the 2008 global financial crisis. It is associated with the accumulation of excess reserves, what central bank reserve managers refer to as the †investment tranche†of their reserve portfolios. |
| Keywords: | International monetary system; Foreign exchange reserves |
| JEL: | F30 F31 F33 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21488 |
| By: | Carlos Giraldo (Fondo Latinoamericano de Reservas - FLAR); Iader Giraldo-Salazar (Fondo Latinoamericano de Reservas - FLAR); Jose E. Gomez-Gonzalez (Department of Finance, Information Systems, and Economics, City University of New York – Lehman College); Jorge M Uribe (Universitat Oberta de Catalunya) |
| Abstract: | This paper examines whether bank ownership shapes the international transmission of monetary policy through the bank lending channel. Specifically, it investigates whether foreign subsidiaries respond differently from domestic banks to U.S. monetary policy shocks. Using a large bank-level dataset covering 2, 039 institutions across 116 countries over the period 2001–2020, we combine detailed balance sheet information with an exogenous measure of U.S. monetary policy shocks. Our results indicate that foreign-owned banks seem to adjust their lending more strongly in response to U.S. monetary policy shocks than domestic banks. However, this effect is highly heterogeneous across banks and therefore not statistically significant. These findings hold regardless of whether lending persistence is explicitly modeled or not. Overall, the evidence downplays the role of internal capital markets in driving the international credit channel of monetary policy over yearly horizons. More broadly, results point suggest that foreign ownership appears to play a secondary role relative to broader balance sheet characteristics and exposure to global financial conditions |
| Keywords: | International bank lending channel; Monetary policy spillovers; Foreign bank ownership; Global financial cycle; Bank lending; Cross-border banking |
| JEL: | F34 G21 E52 F42 |
| Date: | 2026–06–04 |
| URL: | https://d.repec.org/n?u=RePEc:col:000566:023051 |
| By: | Moritz Uhl (WIFO) |
| Abstract: | Reoccurring instability keeps forcing central banks repeatedly to intervene in financial markets, since the 2007-2008 crisis most notably with massive asset purchases, whose popularisation was spearheaded by the Bank of Japan. This paper exploits the world's first implementation of quantitative easing in the vicinity of zero interest rates in Japan from 1999 through 2006 to evaluate their distributional impact by means of the synthetic control method. Comparing the actual and counterfactual development demonstrates that unconventional monetary policy increased the top 10 percent to bottom 50 percent income ratio by more than 28 percent. This exercise also detects a rise of more than 7 percent for the Gini coefficient which is beneath the corresponding value of 12.5 percent for the share of the top income decile. These results, together with evidence from capital and labour income trends as well as data on household ownership of financial assets, suggest that inequality widened via heightening asset prices converting into gains for richer income groups. Conditional upon structural features of an economy a negative distributional side effect of central banking's new tools may turn out to be of severe magnitude. |
| Keywords: | Japan, Income inequality, Unconventional monetary policy, Quantitative easing, Synthetic control method |
| Date: | 2025–01–08 |
| URL: | https://d.repec.org/n?u=RePEc:wfo:wpaper:y:2025:i:692 |
| By: | Parma Bains; Gabriela E Conde; Nobuyasu Sugimoto; Caroline Wu |
| Abstract: | Large technology firms (BigTech) are increasingly expanding into consumer-facing financial services, particularly payments, credit, insurance, asset management, and financial SuperApps. While their current financial stability implications remain limited in most jurisdictions, rapid growth, especially in emerging market and developing economies, raises new conduct, prudential, and systemic risks. This paper analyzes BigTech business models, key activities, and associated risks, and assesses the adequacy of existing regulatory frameworks. It discusses practical options for supervisors to enhance risk identification, strengthen sector-based and group-wide supervision, expand the regulatory perimeter, improve data protection frameworks, and reinforce domestic and international coordination. No global financial standards apply specifically to BigTech. Given the cross-border nature of BigTech activities, global standards should be developed to facilitate internationally consistent regulation and effective cross-border cooperation. |
| Keywords: | BigTech; BNPL; conglomerate; emerging market and developing economies; financial stability; fintech; systemic risk; insurance; credit; payments; asset management; regulation; supervision |
| Date: | 2026–07–10 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imftnm:2026/009 |
| By: | Friedrich, Christian; Zhao, Laura |
| Abstract: | In this paper, we examine the patterns and determinants of cross-border cryptocurrency flows. While our analysis focuses primarily on Bitcoin flows, the cryptocurrency with the largest market capitalization, we show that our key results also extend to four major stablecoins. After documenting global patterns of cross-border Bitcoin flows and contrasting them with those of traditional capital flows, we employ a cross-country panel approach to identify the key drivers of cross-border crypto flows for up to 162 countries. Our results provide evidence for the presence of multiple coexisting motives. The most significant motives comprise strategies to adjust to unfavorable macro and financial developments, as well as the need to conduct international payment and remittance transfers. Moreover, by conducting a case study of cross-border Bitcoin flows after the COVID-19 shock, we find that these motives were particularly relevant at a time when economic conditions were weak and the need for remittances appeared high. Gaining a better understanding of the motives behind cross-border cryptocurrency transactions is crucial for informing the public debate on cryptocurrencies and their potential use cases. |
| Keywords: | Bitcoin |
| JEL: | E4 F3 F32 F38 F51 G15 G23 |
| Date: | 2026–05 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21528 |
| By: | Eric Cuijpers |
| Abstract: | How do unexpected changes in macroprudential capital buffer requirements impact bank valuation, measured by price-to-book ratios? This study addresses this question by constructing macroprudential capital buffer †surprises†from market reactions to buffer announcements and estimating their effects, using panel local projections, on the price-to-book ratios of a panel of large European banks. The analysis shows that unexpected buffer surprises are associated with a short-run decline in price-to-book ra-tios, followed by a sustained increase in the weeks following the announcement. Such an increase is consistent with market recognition of reduced risk, despite higher buffer requirements that could lower distributable resources, suggesting that the risk channel dominates the payout channel in the valuation of large European banks. |
| Keywords: | Capital regulation; Macroprudential policy; Bank valuation |
| JEL: | G21 G28 G32 |
| Date: | 2026–07 |
| URL: | https://d.repec.org/n?u=RePEc:dnb:dnbwpp:864 |
| By: | Badola, Shivani (Institute for Studies in Industrial Development); Mukherjee, Sacchidananda (National Institute of Public Finance and Policy) |
| Abstract: | Credit constraints often hinder investment in unincorporated enterprises, limiting innovation and overall performance, including reduced productivity and output, and slower growth. In this paper, we assess credit constraints on unincorporated enterprises using NSSO’s unit-level data from the Annual Survey of Unincorporated Enterprises 2022-23. Identifying the factors and determinants of credit constraints is crucial for informing policy recommendations. Based on sources of outstanding loans and survey responses, we classify enterprises into three categories: fully constrained, partially constrained, and not constrained. We find that manufacturing enterprises face more credit constraints than those engaged in trading and services. Furthermore, the study indicates that female entrepreneurs and those belonging to SC/ST or OBC castes face comparatively greater credit constraints than others. Other factors, such as region (rural vs. urban), size (annual turnover and asset value), GST registration status, price-cost margin, etc., are strong determinants of credit constraints or access to credit. |
| Keywords: | Unincorporated Enterprises ; Credit Constraints ; Manufacturing ; Multinomial logit model ; India |
| JEL: | C35 E51 G20 L60 |
| Date: | 2026–06 |
| URL: | https://d.repec.org/n?u=RePEc:npf:wpaper:26/449 |
| By: | Latansa Izzata Dien Elam (C); Martina Nardon (Ca’ Foscari University of Venice) |
| Abstract: | Green bonds have become a key instrument for financing projects with environmental and climate-related benefits, amid the rapid growth of ESG investments across institutional, wealth, and retail investors. While the global green bond market has expanded substantially across both developed and emerging economies, evidence on how equity investors respond to green bond issuances in Asian markets remains limited. This paper examines stock market reactions to green bond announcements by publicly listed firms in Asia over the period 2014–2025. It combines a descriptive overview of green bond market development across major Asian economies with an event-study analysis based on the market model, used to estimate cumulative abnormal returns around announcement dates. The empirical analysis considers heterogeneity across countries, sectors, first-time and repeated issuances, developed and developing markets, sub-periods, and the pre- and post-COVID periods. The results show no statistically significant aggregate stock market reaction across alternative event windows. However, responses vary across countries and sectors, suggesting that equity investors may assess green bond announcements differently depending on the institutional context and the credibility or materiality of the underlying environmental commitment. Overall, the findings indicate that, in Asian equity markets, green bond issuance is generally perceived as a neutral financing decision rather than a systematic short-term value-creating event. The paper contributes by documenting the evolution of Asian green bond markets and by providing baseline empirical evidence on the equity-market implications of green bond announcements in the region. |
| Keywords: | Sustainable Finance, Green Bonds, Stock Market Reaction, Event Study, Asian Markets |
| JEL: | G14 G15 G23 Q56 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ven:wpaper:2026:19 |