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.

Savings and Financial Sector Development: Assessing the Evidence

Abstract: In this valuable new book, a distinguished group of authors takes stock of the existing state of knowledge in the field of finance and the development process. Each chapter offers a comprehensive survey and synthesis of current issues. These include such critical subjects as savings, financial markets and the macroeconomy, stock market development, financial regulation, foreign investment and aid, financing livelihoods, microfinance, rural financial markets, small and medium enterprises, corporate finance and banking.

Development of Insurance Sector and Economic Growth: The G-20 Experience

Abstract: The paper examines the long-run relationship between development of insurance sector and economic growth in G-20 countries for the period 1980-2011. Using Vector Auto-Regressive (VAR) model for testing the Granger causalities, the study finds the presence of both unidirectional and bidirectional causality between development of insurance sector and economic growth. The policy implication of this study is that the economic policies should recognize the differences in the development of insurance sector and economic growth in order to maintain sustainable development in the G-20 countries.Key Words: Development of insurance sector, Economic growth, VAR, Granger causality, G-20(ProQuest: ... denotes formulae omitted.)INTRODUCTIONIn this paper, we analyze the relationship between economic growth and six dimensions of insurance sector, a sub-sector of the financial development. The six dimensions of in suran ce sector include life in surance density, non-life insurance density, total insurance density, life insurance penetration, non-life insurance penetration and total insurance penetration. These are extensively used as proxies of insurance market activities and particularly with reference to the studies of the relationships between development of insurance sector and macroeconomic factors such as gross domestic product, interest rate, inflation, and so on (see, for instance, Ward and Zurbruegg, 2000; Zheng et al., 2009; Chen et al., 2012; Chen et al., 2013; and Guo and Huang, 2013).Usually, financial development refers to aggregate size of the financial sector, its sectorial composition, and a range of attributes of individual sectors that determine their effectiveness in meeting users' requirements. The evaluation of financial structure should cover the roles of the key institutional players, including the central bank, commercial and merchant banks, saving institutions, development financial institutions, insurance companies, mortgage entities, pension funds, the stock market, and other financial market institutions (IMF, 2005; and Zaman et al., 2012). Most of the financial literature provides wide-coverage on financial sector development, particularly with reference to both banks and stock market development, and its link to economic growth. However, the inclusion of insurance sector in growth enhancing process is having low coverage and has received much less attention than the banking and equity markets (see, for instance, Guo and Huang, 2013; and Lee et al., 2013a). Moreover, the inclusion of insurance sector in economic growth are documented in the following literature: Beenstock et al. (1986), Wasow and Hill (1986), Cummins and Outreville (1987), Outreville (1996 and 1990), Enz (2000), Ward and Zurbruegg (2000), Beck and Webb (2003), Harrington and Yu (2003), Hussels et al. (2005), Kugler and Ofoghi (2005), Webb et al. (2005), Arena (2008), Haiss and Sumegi (2008), Vadlamannati (2008), Curak et al. (2009), Avram et al. (2010), Andersson et al. (2010), Ching et al. (2010), Han et al. (2010), Lee et al. (2010), Nektarios (2010), Lee (2011), Liu (2011), Chang and Lee (2012), Chen et al. (2012), Horng et al. (2012), Lee and Chiu (2012), Lee et al. (2012), Teresa and Garcia (2012), Chang et al. (2014), Chen et al. (2013), Dragos and Dragos (2013), Lee (2013), Lee et al. (2013b), Cristea et al., (2014), and Liu and Lee (2014).Insurance market is a late development industry, causing the difficulties on assessing the role of insurance in the development process (Outreville, 1990). This study adds the insurance coverage to the finance literature by addressing two important questions: first, the existence of cointegration between Development of Insurance Sector (DIS) and per capita economic growth (GDP); and second, the presence of long-run and short-run direction of causality between DIS and GDP. The focus is on G-20 countries during the period 1980-2013. Therefore, the insurance services, like other financial services, has fully grown in quantitative importance as an integral part of the general development of the financial sector, with the emphasis more recently pitching to insurance business (Lee et al. …

Growth-Effects of Inflation Targeting: The Role of Financial Sector Development

Abstract: The paper develops a dynamic general equilibrium monetary endogenous growth model. The closed economy model is inhabited by consumers, firms, a Cournotian monopolistically competitive banking system, besides, an inflationtargeting monetary authority, and, in turn, analyzes the effect of a tight monetary (disinflationary) policy on growth. We show that the effect of a lower inflation target on growth is ambiguous, with the ultimate effect depending on the initial levels of growth and the individual bank size, besides, a whole host of structural parameters defining the preferences and the production structure of the economy.

Contractual Savings in Countries with a Small Financial Sector

Abstract: Countries with small financial systems are generally small economies with a reduced dimension of institutional relationships, a greater concentration of wealth, and a relatively less independent civil service. These characteristics facilitate concentration of functions and, more generally, weak governance. Only small economies with a relatively high level of per capita income, minimum core of sound banks and insurance companies, sound and credible macroeconomic policies, and open capital accounts can benefit from the development of contractual savings. This can increase the options to obtain sound coverage against contingencies, increase the supply of long term savings, promote financial deepening, and improve financial risk management.

Filling the Gap: Digital Credit and Financial Inclusion

Abstract: Can fintech credit fill the credit gap in the consumer and business segments? There are few cross-country studies that explore this question. Focusing on marketplace lending, an important part of fintech credit, we use data for 109 countries from 2015 to 2017 to study the relationship between fintech credit to businesses and consumers and various aspects of financial development. Marketplace lending to consumers grows in countries where financial depth declines highlighting the role of fintech credit in filling the credit gap by traditional lenders. This result is particularly strong in low-income countries. In the business segment, marketplace lending expands where financial efficiency declines. Our findings show that low-income countries take advantage of the fintech credit opportunity in the consumer segment but face important challenges in the business segment.