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on Financial Development and Growth |
| By: | Emanuele Brancati; Qingqing Cao; Raoul Minetti; Nicholas Jaehyun Yi |
| Abstract: | We study how the integration between the financial sector and the production structure influences business cycle transmission. In a dynamic economy where banks provide assetbased finance to supply chains, we find that integration along an extensive margin, in the form of firms’ ability to borrow from banks specialized in different supply chain segments, amplifies negative banking shocks. In contrast, integration along an intensive margin, in the form of greater diffusion of bank factoring and invoice discounting, mitigates the transmission of banking shocks. A quantitative application to Italy reveals that the destabilizing effects of bank-supply chain integration can prevail when inter-firm commercial linkages are underdeveloped. The predictions are consistent with bank-firm matched data from Italy. |
| Keywords: | Banks; Financial integration; Production networks; Factoring |
| JEL: | E23 E32 E44 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:sap:wpaper:wp278 |
| By: | Antoine Camous; Eric Monnet; Damien Puy |
| Abstract: | A new 70-year dataset of world macroeconomic cycles reveals that the growing synchronisation of world economies mainly concerns asset prices. In contrast, the global synchronisation of variables such as GDP and credit remains low. Indeed, this “decoupling” has widened since the global financial crisis. We draw lessons from this for the conduct of public policies. <p> Une nouvelle base de données macroéconomiques internationales sur 70 ans permet d’établir que la synchronisation croissante des économies mondiales concerne surtout les prix des actifs. Des variables telles que PIB et crédit restent faiblement synchronisées au niveau mondial. Ce "découplage" s’est même accentué après la crise financière mondiale. Nous en tirons des enseignements pour la conduite des politiques publiques. |
| Date: | 2026–03–03 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:econot:437 |
| By: | Andrea Foschi |
| Abstract: | I develop a model-based definition of time-varying sovereign bond safety, and apply it empirically by constructing a news-based index, the FLY, that measures global safe-assets demand. The FLY captures flight-to-safety episodes, the savings glut, and natural interest rate declines. Estimated FLY loadings allow the classification of bonds as safe, neutral, or risky. Post-Great-Recession, the global set of safe assets shrank, but US safety increased. I detect regime switches in FLY loadings: positive switches (becoming safe) align with expansions, higher government spending, lower debt, and credit upgrades; negative switches (becoming risky) are associated with contractions, reduced spending, higher debt, and downgrades. |
| Keywords: | safe assets, flight to safety, sovereign debt, convenience yield, fiscal policy |
| JEL: | E62 E63 F34 F41 F44 G12 G15 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12567 |
| By: | Masataka Mori |
| Abstract: | Financial distress, which varies across the U.S., can affect households’ well-being and the economy. Measures of distress can serve as economic indicators. |
| Keywords: | financial distress; household finances; geographic distribution; economic indicators |
| Date: | 2025–03–25 |
| URL: | https://d.repec.org/n?u=RePEc:fip:l00100:102939 |
| By: | Hattori, Keisuke |
| Abstract: | This paper analyzes a vertical market structure in which downstream firms compete imperfectly in quantities while upstream banks endogenously determine loan rates. Banks' pricing depends on the policy rate, lending volume, and banking conduct (profit-maximizing versus contestable). With contestable banking, average-cost loan pricing creates feedback between lending and loan rates, making monetary transmission state-dependent. We show that monetary policy, financial regulation, and competition policy---typically delegated to separate authorities---interact non-additively through this upstream channel. Tighter financial regulation amplifies monetary transmission under contestable banking; competition policy can either strengthen or weaken it depending on banking pass-through. These results imply that policy evaluation requires treating the three instruments as a mix rather than in isolation. Extensions with default risk show that policy tightening and weaker competition can be welfare-improving. |
| Keywords: | Imperfect Competition; Endogenous Finance; Monetary Transmission; Financial Regulation; Competition Policy |
| JEL: | D43 G21 L13 |
| Date: | 2026–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127924 |
| By: | Bekkers, Eddy; Corong, Erwin L.; Smith, Donal; Yu, Roger So; Zhao, Danchen |
| Abstract: | This paper presents quantitative projections on the expected economic impact of the Investment Facilitation for Development (IFD) Agreement, which proceeds in three steps. First, we estimate the empirical impact of the host-economy investment facilitation environment on foreign affiliate sales. Second, we map the agreement's mandatory and soft obligations (including best-endeavour) into advalorem equivalent reductions in the costs of multinational production. Third, the economic effects of these policy shocks are projected with a multi-region, multi-sector economic model that explicitly incorporates affiliate sales, foreign direct investment (FDI) and input-output linkages. Our benchmark simulations project that implementation of the IFD Agreement's mandatory obligations would increase global real GDP by 0.8 per cent over the next ten years, driven by a substantial expansion in global FDI flows and foreign affiliate sales. The simulations indicate that developing and low-income economies are expected to see the largest increases in GDP, since they are expected to see the largest improvement in the investment facilitation environment. |
| Keywords: | Foreign Direct Investment, Foreign Affiliate Sales, Computable General Equilibrium |
| JEL: | C68 F21 F23 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:wtowps:339598 |
| By: | Wantchekon, Leonard |
| Abstract: | Research and development (R&D) is a central driver of long-term economic growth, technological progress, and institutional capacity. Yet many African countries remain marginal in the global knowledge economy, with limited investment in science, technology, and innovation (STI) and weak research ecosystems. This paper argues that the persistence of Africa's innovation deficit is partly rooted in the design of foreign aid and development policies, which have historically prioritized short-term service delivery over long-term investments in scientific capacity and technological capability. Drawing on economic theory, empirical evidence, and comparative case studies, the paper examines the role of R&D in structural transformation and assesses the structural barriers that limit innovation in Africa, including chronic underfunding, short-term aid cycles, misalignment between donor priorities and national strategies, and weak institutional systems. Evidence from countries such as Ethiopia, Brazil, and China demonstrates how sustained investment in research institutions, human capital, and international knowledge partnerships can generate significant productivity gains and technological upgrading. The paper concludes that development cooperation must shift toward innovation-driven growth. Strengthening universities, financing basic sciences, and fostering university-industry-government collaboration are essential steps for enabling African countries to transition from technology consumers to producers in the global knowledge economy. |
| Keywords: | Foreign aid, development policy, knowledge economy, innovation |
| JEL: | F35 O30 O32 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkwp:339614 |
| By: | Rachael Calleja (Center for Global Development); Beata Cichocka (Center for Global Development); Sara Casadevall Bellés (Center for Global Development) |
| Abstract: | Development agencies are being asked to deliver against a widening set of objectives with tighter budgets and more contested mandates. This paper uses an organizational, forward-looking lens to examine effectiveness, treating it as a question not only of what agencies aim to do but of what they are able to do under constraint and uncertainty. Drawing on semi-structured interviews with officials across four bilateral development agencies from OECD-DAC bilateral agencies, we show how external realities lead to contested mandates and tighter budgets, which increasingly set the terms of action, and how, downstream of these pressures, internal bottlenecks – capacity and skills gaps, siloed coordination, slow processes, and weak learning and results systems – frequently determine whether agencies can respond coherently at all. We synthesize the implications through four strategic questions that shape reform choices, asking how to clarify agency role and purpose, improve and scale impact under constrained budgets, strengthen responsiveness to partner needs as contexts shift (including faster, more locally informed decision pathways), and evidence and communicate value to sustain legitimacy with both domestic and partner audiences. We offer several recommendations for agencies based on our findings, and conclude that the next phase of the effectiveness agenda may hinge less on restating principles than on building organizational coherence and adaptive capacity that can translate contested mandates into credible action. |
| Date: | 2026–03–31 |
| URL: | https://d.repec.org/n?u=RePEc:cgd:ppaper:388 |
| By: | Ms. Rina Bhattacharya; Mr. Alexei Goumilevski; Carlos E Guevara; Justin Lesniak; Flora Lutz |
| Abstract: | This paper estimates debt overhang thresholds separately for 105 countries using a Kalman Filter approach applied to a standard growth model. The results reveal pronounced heterogeneity in the estimated thresholds, both within and across country groups but limited time-variation. In a second step, we explore the structural factors underlying this heterogeneity. The empirical results underscore that a strong payment track record, high quality institutions and governance, public debt composition (currency, maturity, and creditor base), and financial market size and development are associated with higher pubic debt overhang thresholds. |
| Date: | 2026–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/051 |
| By: | Thomas Loussouarn (AFD - Agence française de développement); Thibault Vasse (AFD - Agence française de développement) |
| Keywords: | sovereign debt, regional biases, international financial governance |
| Date: | 2025–11 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05529861 |
| By: | Molka Ben Ayed (USO - جامعة سوسة = Université de Sousse = University of Sousse); Abderraouf Ben Ahmed Mtiraoui (MOFID-Université de Sousse); Anis Bouabid (USO - جامعة سوسة = Université de Sousse = University of Sousse) |
| Abstract: | This study investigates the relationship between external debt, corruption, and capital flight in emerging economies over the period 2004-2020. The selected timeframe ensures the availability of consistent data while encompassing both periods of macroeconomic stability and episodes of global financial stress. To address potential endogeneity, unobserved country-specific effects, and the dynamic nature of capital flight, the analysis employs the Arellano-Bond dynamic panel estimator (dynamic panel framework estimated using the Generalized Method of Moments (GMM)). This approach uses lagged levels of the endogenous variables as instruments, allowing for consistent estimation of the impact of external debt and corruption on capital flight. The methodology provides robust evidence on the dynamic interactions between governance quality, external borrowing, and capital outflows in emerging economies. |
| Keywords: | External debt, Corruption, Emerging economies, GMM approach, Capital flight |
| Date: | 2026–02–25 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05527841 |
| By: | Krystian Bua (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy); Giovanni Dosi (Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy); Costas Lapavitsas (Department of Economics, SOAS University of London. Russell Square, London WC1H 0XG, UK); Maria Enrica Virgillito (Department of Economic Policy, Universita` Cattolica del Sacro Cuore, Milan, Italy; Institute of Economics, Scuola Superiore Sant’Anna, Pisa, Italy) |
| Abstract: | This article contributes to the literature on corporate financialization by examining the role of asset man- agers. Although these new capitalist enterprises have been an object of investigation, a clear understanding of their importance at the global scale, penetration across industries, ramification across firms, and system- wide implications remains an evolving area of research. With these aims, we first highlight three shifts in the contemporary organization of finance associated with the rise of asset management: the weakening of finance’s intermediation function, the change in the locus of financial influence, and the reconfiguration of the mechanisms underpinning contemporary imperialism. We then provide a newly compiled dataset that maps the ownership stakes of the asset management industry within the universe of billion-dollar companies between 2013 and 2025 and quantify how large current levels of common ownership, that originates from asset managers’ holdings, are in the global corporate sector. Accounting for market and relative investor concentration, and overlapping ownership, we show that the capacity of asset management to influence vir- tually every aspect of production and investment has grown exponentially over time, spanning industries, sectors, and macro-regions. Given our empirical analysis, we provide new evidence that the pervasiveness of common ownership driven by portfolio managers has first-order implications for the restructuring of U.S. hegemonic power in the post-2008 global economic order. |
| Keywords: | Asset manager capitalism, Political economy, Finance, Common ownership, Network analysis, Imperialism |
| JEL: | D23 F54 G34 P12 |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:soa:wpaper:273 |
| By: | Olorunnisola Abiola Olubukola (Kampala International University, Kampala, Uganda); Aine Oman (Kampala International University, Kampala, Uganda); Manyange Micheal (Kampala International University, Kampala, Uganda); Olaiya Sanya Peter (Kampala International University, Kampala, Uganda); Matovu Juma (Kampala International University, Kampala, Uganda) |
| Abstract: | Financial inclusion is essential for all individuals in the community reflecting affordability, accessibility and reliability of financial services particularly in Nsiika town council, Buhweju district, Uganda where the levels of financial inclusion are still very low with only 16% of the mature population keeping their funds at official deposit taking organizations and now with introduction of mobile money services, it is considered a major factor. The main purpose of the study is to |
| Keywords: | diffusion of innovations theory, mobile loans, Uganda, Buhweju district, financial inclusion, mobile money services, mobile money services financial inclusion Buhweju district Uganda diffusion of innovations theory mobile loans |
| Date: | 2025–09–12 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05547005 |
| By: | Koloma, Yaya |
| Abstract: | This study explores whether gender disparities exist in credit access among business owners in Côte d’Ivoire, utilizing data from the 2016 World Bank Enterprise Surveys. Through descriptive analysis and the Fairlie decomposition model, the research uncovers significant findings. Female-owned firms demonstrate higher proactivity in applying for credit, with 36.0% seeking loans compared to 23.5% of male-owned firms. Additionally, 32.6% of female-owned firms secure credit versus 21.7% of male-owned counterparts, resulting in a gender gap of 10.9%. The Fairlie decomposition attributes 51.4% of this gap to observable differences in endowments, while 48.6% is linked to unobservable factors. Contrary to traditional narratives, the results suggest that female entrepreneurs in Côte d’Ivoire are more engaged in the credit market and more successful in obtaining loans, potentially due to better preparation, supportive networks, and perceived lower risk by lenders. The study highlights the critical roles of both observable factors, such as business size and sector, and unobservable elements, including lender perceptions and gender-specific strategies. The findings call for nuanced policy interventions to support female entrepreneurship, including tailored financial products, enhanced business networks, and strategies to mitigate implicit biases in financial institutions while promoting gender equity in Côte d’Ivoire. |
| Keywords: | Gender, Business Ownership, Access to Finance, Côte d’Ivoire |
| JEL: | G21 G32 J16 L21 L26 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:esprep:339394 |
| By: | Hattori, Keisuke |
| Abstract: | This paper shows that entry can raise each individual firm's profit---not merely industry profits---when Cournot oligopolists finance working capital through a contestable banking sector. Under average-cost pricing of loans, entry dilutes fixed banking costs across greater lending volume, lowering loan rates. Entry raises per-firm profits if and only if equilibrium output lies in an intermediate range where financing relief dominates intensified competition. Bank-side and firm-side frictions play opposing roles: firm-side frictions facilitate profit-increasing entry by amplifying cost relief as firms shrink, while bank-side frictions suppress it by raising funding costs as aggregate lending expands. |
| Keywords: | Profit-increasing entry, Cournot oligopoly, Contestable banking, Financial frictions |
| JEL: | D43 G21 G32 L13 |
| Date: | 2026–01–31 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:127926 |
| By: | Lucille Collet; Jean-Baptiste Gossé; Frédéric Guével; Camille Jehle |
| Abstract: | Europe’s venture capital market is growing but remains much smaller than in the United States, holding back innovation. The gap is partly due to a lack of appetite among private European investors. A more integrated ecosystem, pan-European funds and measures to facilitate institutional investors’ access to venture capital are all key to boosting start-up financing. <p> Le capital-risque progresse en Europe mais reste très en deçà du modèle américain, ce qui constitue un frein à l’innovation. Ce retard tient à une faible mobilisation des investisseurs privés européens. Un écosystème plus intégré, des fonds paneuropéens et des mesures facilitant l’accès des investisseurs institutionnels au capital-risque sont clés pour renforcer le financement des start-up. |
| Date: | 2026–02–18 |
| URL: | https://d.repec.org/n?u=RePEc:bfr:econot:435 |
| By: | Hardhik Mohanty; Bhaskar Krishnamachari |
| Abstract: | Daily probability changes in Kalshi macro prediction markets forecast cryptocurrency realized volatility through two distinct channels. The monetary policy channel, measured by Fed rate repricing on KXFED contracts, predicts Bitcoin volatility in sample with t = 3.63 and p |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.01431 |
| By: | Alexander Copestake; Cage Englander; Maria Soledad Martinez Peria; Mr. Germán Villegas-Bauer |
| Abstract: | We examine whether financial market participants, in aggregate, expect stablecoins to play an important role in payments. Using high-frequency variation in stock prices, we estimate that U.S. legislation supporting the use of stablecoins in payments reduced the market value of listed incumbent payment firms by 18% or approximately $300 billion, consistent with stablecoins increasing competition in the payments sector. This impact is larger than that of other recent pro-competitive regulatory shocks and (i) proportionately larger for incumbents focused on cross-border payments, (ii) smaller for incumbents protected by network effects, and (iii) smaller for incumbents already offering crypto-related services. |
| Keywords: | Crypto Assets, Stablecoins, Payments, Stock Returns |
| Date: | 2026–03–20 |
| URL: | https://d.repec.org/n?u=RePEc:imf:imfwpa:2026/052 |
| By: | Demary, Markus |
| Abstract: | Grenzüberschreitende Kartenzahlungen waren in der EU bisher nicht über EU-Dienstleister möglich. Wero und der digitale Euro sollen für mehr europäische Souveränität im Zahlungsverkehr sorgen. Problematisch ist, dass der digitale Euro Wero Konkurrenz macht. |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:iwkkur:339646 |
| By: | Magin, Jana Anjali; Neyer, Ulrike; Stevens, Alexandra |
| Abstract: | Many Central banks around the world are considering the introduction of a Central Bank Digital Currency (CBDC) as a new means of payment. One of the reasons for introducing a CBDC is a change in payment behavior towards an increasing use of electronic forms of payment. This paper examines the introduction of a CBDC as a new means of payment. We conduct a controlled laboratory experiment to assess how adoption costs and anonymity affect the demand for CBDC compared to established means of payment such as cash and deposits. We use a 2x2 treatment design in which CBDCs differ in adoption costs and anonymity. We find that adoption costs play an important role in the decision to use CBDC as a new means of payment and that anonymity plays a role in the allocation of experimental money between different means of payment. |
| Keywords: | Central bank digital currencies, experimental economics, payment methods, anonymity, adoption costs |
| JEL: | E41 E42 C92 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:dicedp:339605 |
| By: | Wendy Currie (Audencia Business School); Jonathan Seddon (Audencia Business School) |
| Abstract: | This paper explores the narratives of the evolution of the first digital asset, Bitcoin. Emerging as an unregulated, decentralized digital asset, it was developed as an alternative to fiat currency. Using primary and secondary data sources, the discussion is framed around four key themes that influence adoption: cryptographic technology, trust, decentralized finance, and regulation. Each focal theme extends the dialectical debates on Bitcoin, revealing competing narratives on digital responsibility and oversight of the nascent digital asset market. A nuanced understanding of the trajectory and scope of digital currencies to repurpose financial markets is presented. This study aligns with this special issue through its analysis of positive anda negative crypto-asset contributions and the digital responsibilities that develop from transformation and adoption. A major contribution is that decentralized finance is not empirically confirmed, as centralized financial institutions are now offering digital assets as part of their regulated client portfolios. |
| Keywords: | Crypto-asset technology, Trust, Regulation, Bitcoin, Ethereum |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05563837 |