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Financial sector development

About: Financial sector development is a research topic. Over the lifetime, 1674 publications have been published within this topic receiving 90787 citations.


Papers
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Journal ArticleDOI
TL;DR: In this paper, the authors examined the relationship between remittances and growth and found that remittance can substitute for a lack of financial development and hence promote growth in less financially developed countries.
Abstract: There has been little systematic empirical study on the relationship between remittances and growth. This paper attempts to examine this relationship. Using a newly constructed crosscountry of data series for remittances covering a large sample of developing countries, we relate the interaction between remittances and financial development and its impact on growth. We analyze how a country's capacity to use remittances and its effectiveness in doing so might be influenced by local financial sector conditions. Given the difficulty of borrowing in developing countries, we explore the hypothesis that remittances can substitute for a lack of financial development and hence promote growth. The empirical analysis shows that remittances can promote growth in less financially developed countries. This relationship controls for the endogeneity of remittances and financial development using a Generalized Method of Moments (GMM) approach, does not depend on the particular measure of financial sector development used, and is robust to a number of sensitivity tests.

285 citations

Posted Content
TL;DR: Workers' remittances to developing countries have become the second largest type of flows after foreign direct investment as mentioned in this paper, and they contribute to increasing the aggregate level of deposits and credit intermediated by the local banking sector.
Abstract: Workers' remittances to developing countries have become the second largest type of flows after foreign direct investment. The authors use data on workers' remittance flows to 99 developing countries from 1975-2003 to study the impact of remittances on financial sector development. In particular, they examine whether remittances contribute to increasing the aggregate level of deposits and credit intermediated by the local banking sector. This is an important question considering the extensive literature that has documented the growth-enhancing and poverty-reducing effects of financial development. The findings provide strong support for the notion that remittances promote financial development in developing countries.

275 citations

Book ChapterDOI
TL;DR: A growing and deepening divide has opened up between transition countries where economic development has taken off and those caught in a vicious cycle of institutional backwardness and macroeconomic instability This divide is visible in almost every measure of economic performance: GDP growth, investment, government finances, growth in inequality, general institutional infrastructure and increasingly in measures of financial development.
Abstract: A growing and deepening divide has opened up between transition countries where economic development has taken off and those caught in a vicious cycle of institutional backwardness and macroeconomic instability This “Great Divide” is visible in almost every measure of economic performance: GDP growth, investment, government finances, growth in inequality, general institutional infrastructure and increasingly in measures of financial development Strategies for financial development have differed dramatically across countries and over time, offering interesting opportunities to study the links between real and financial sector development

266 citations

Journal ArticleDOI
Stijn Claessens1, Luc Laeven1
TL;DR: In this paper, the authors first estimate for 16 countries a measure of banking system competition based on industrial organization theory, and then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster.
Abstract: The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper the authors first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. Their results suggest that the degree of competition is an important aspect of financial sector functioning.

260 citations

Journal ArticleDOI
Paul Wachtel1
TL;DR: The role of financial sector development in economic growth has become a major topic of empirical research in just the last ten years as mentioned in this paper, and there is an emerging consensus about the role of the financial sector in growth.
Abstract: The role of financial sector development in economic growth has become a major topic of empirical research in just the last ten years. A standard approach to explaining growth has emerged and the literature has examined the role of the aggregate amount of financial intermediation, bank lending and the influence of equity market development. More recently, the literature has examined aspects of institutional development and infrastructure on growth. Despite the econometric difficulties encountered, there is an emerging consensus about the role of the financial sector in growth. Panel data sets have produced impressive results but they are often fragile. Estimates with recently developed dynamic panel techniques have provided additional evidence. This paper summarizes the consensus and discusses the techniques that have been used and the problems encountered.

254 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
202357
202279
202155
202093
201991
201888