Topic
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 published on a yearly basis
Papers
More filters
Posted Content•
TL;DR: In this article, the authors developed an environmental dynamic stochastic general equilibrium (E-DSGE) model with heterogeneous production sectors and analyzed the transmission mechanism of technology, monetary, and financial shocks and found that only a positive financial shock to green firms can boost production and credit for the green sector.
Abstract: This paper develops an environmental dynamic stochastic general equilibrium (E-DSGE) model with heterogeneous production sectors. In particular, the model comprises some low-carbon emission firms that finance their investments and production only through banking loans, and high-carbon emission firms that finance their investments either with bank loans or by issuing equities. Moreover, government imposes intensity targets to reduce pollution, and high-carbon emission firms buy permits to allow their production. The model studies the transmission mechanism of technology, monetary, and financial shocks and finds that only a positive financial shock to green firms can boost production and credit for the green sector. A financial shock can be interpreted as the borrowing capacity of firms in terms of tightening or relaxing the enforcement of collateral constraints. In contrast, a positive technology shock and easier monetary policy lead only to a short output on impact, but in the longer term green firms experience losses. Later, the paper analyzes the impact of several macro prudential policies and finds that only differentiated capital requirements can help to sustain green financing.
17 citations
TL;DR: The authors found that the post-reform performance of the manufacturing sector is heterogeneous across industries and pointed out the importance of infrastructure development and financial sector development for manufacturing sector's growth to accelerate further.
Abstract: India has undertaken extensive reforms in its manufacturing sector in the last two decades. However, an acceleration of growth in manufacturing, and a concomitant increase in employment, has eluded India. What might be holding the sector back? Using Annual Survey of Industries data at the three-digit level and difference in estimates this paper finds that the post-reform performance of the manufacturing sector is heterogeneous across industries. In particular, industries dependent on infrastructure or external finance, and labour-intensive industries have not been able to reap the maximum benefits of reforms. The results point to the importance of infrastructure development and financial sector development for the manufacturing sector's growth to accelerate further. They also emphasize the need to clearly identify and address the factors inhibiting the growth of labour-intensive industries.
17 citations
Posted Content•
TL;DR: In this paper, the authors present a theory of financial infrastructure, or the set of rules, institutions, and systems within which agents carry out financial transactions, and investigate the effects of such infrastructure development on financial architecture and real capital accumulation.
Abstract: This study presents a theory of financial infrastructure - or the set of rules, institutions, and systems within which agents carry out financial transactions. It investigates the effects of financial infrastructure development on financial architecture and real capital accumulation, taking into account financial-sector special interests. It shows that a more developed infrastructure promotes financial market growth, reduces the scope of traditional banking, and helps investors make more efficient investment decisions. The theory presented explains why traditional banking predominates in the early stages of economic development and becomes relatively less important as the economy develops, and why banks may retard financial sector development. The study provides evidence in support of its predictions.
17 citations
Posted Content•
TL;DR: In this paper, the impact of economic diversification on the development of finance is investigated and the authors suggest that a large and robust role for diversification in shaping financial development can be found.
Abstract: An influential theoretical literature has observed that economic diversification can reduce risk and increase financial development. But causality operates in both directions, as a well functioning financial system can enable a society to invest in more productive but risky projects, thereby determining the degree of economic diversification. Thus, ordinary least squares (OLS) estimates of the impact of economic diversification on financial development are likely to be biased. Motivated by the economic geography literature, this paper uses instruments derived from topographical characteristics to estimate the impact of economic diversification on the development of finance. The fourth estimates suggest a large and robust role for diversification in shaping financial development. And these results imply that, by impeding financial sector development, the concentration of economic activity common in developing countries can adversely affect financial and economic development.
16 citations
01 Jan 2015
TL;DR: In this article, financial cooperatives crowded out by commercial banks in the process of financial sector development are crowded out of the market by the commercial banks, and the problem is addressed.
Abstract: Are financial cooperatives crowded out by commercial banks in the process of financial sector development?
16 citations