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.
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TL;DR: In this article, the effects of certain institutional factors on financial sector development in Sub-Saharan Africa (SSA) are assessed using DEA to determine the extent to which these institutions affect the financial sector, and suggest which institutions play a more critical role in each country.
Abstract: The paper assesses the effects of certain institutional factors on financial sector development in Sub- Saharan Africa (SSA). Data Envelopment Analysis (DEA) is applied to determine the extent to which these institutions affect the financial sector, and to suggest which institutions play a more critical role in each country. Results suggest that institutional factors affect financial depth and access to financial services more than asset quality and profitability (measured by nonperforming loans (NPL) and return on equity (ROE). The results also suggest that depth of credit information has the strongest influence on the NPL ratio, and political stability affects access the most. Based on model findings, policy implications on prioritizing institutional reforms to enhance financial sector development are suggested for individual countries and for country groups.
5 citations
TL;DR: In this article, the authors argue that financial sector development could dampen the appreciation effect of capital inflows in emerging markets by improving the efficient allocation of resources, and they find that the exchange rate appreciation of FDI inflows is indeed attenuated when financial and capital markets are larger and more active.
Abstract: This paper argues that, in improving the efficient allocation of resources, financial sector development could dampen the appreciation effect of capital inflows. Using dynamic panel data techniques, the paper finds that the exchange rate appreciation effect of FDI inflows is indeed attenuated when financial and capital markets are larger and more active. The main implication of these results is that one of the main dangers associated with large capital inflows in emerging markets-the destabilization of macroeconomic management due to a sizeable appreciation of the real exchange rate-can be mitigated partly by developing a deep financial sector.
5 citations
Posted Content•
30 Dec 2010
TL;DR: In this paper, the short and long run effects of remittances and trade openness on income in Vanuatu were estimated using bounds approach and annual data for the period 1981-2008.
Abstract: In this study, using bounds approach and annual data for the period 1981-2008, the short and long-run effects of remittances and trade openness on income in Vanuatu are estimated. The results show trade openness and remittances having positive and significant effects, with no significant effects from financial development (FIN), foreign direct investment (FDI), and official development aid (ODA). FDI and ODA in this sense behave somewhat differently than remittances. Therefore a greater liberalization of goods and services market in general and short-term temporary movements of people in particular to boost remittances inflows and improving the overall institutional infrastructure is put forward as priority policy measures.
5 citations
Journal Article•
TL;DR: In this paper, the authors present a model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the very high external financing costs they face.
Abstract: The paper presents a model in which credit-constrained firms might delay the adoption of new and more productive technologies because of the very high external financing costs they face. Our point of departure is that the efficiency of the banking system can have a profound impact on real resource and investment allocation not only directly, by reducing the amount of resources channelled to the credit market, but also indirectly by affecting entrepreneurs’ investment decisions. Along these lines of reasoning we develop a model of information asymmetries in the credit market in which high costs of processing bank loan applications might obstruct investments in high-tech projects and favour, instead, low-return, self-financed investments in mature sectors. The result is that these kinds of costs have a negative impact on the average capital productivity and on the rate of economic growth. In specific circumstances, the combination of these
5 citations
TL;DR: In this article, the authors explored a wide range of macroeconomic, fiscal and institutional factors in order to assess their relevance as determinants of financial development in MENA countries and found that better institutions have a positive and significant effect on financial development, some institutional aspects matter more than others do.
Abstract: The study has considered determinants of financial sector development in the MENA region. We explore a wide range of macroeconomic, fiscal and institutional factors in order to assess their relevance as determinants of financial development in MENA countries. A first interesting result is that bank and non-bank development is differently affected. For example, growth does not promote banking activity; it promotes development of the stock market. While we find that better institutions, in general, have a positive and significant effect on financial development, some institutional aspects matter more than others do. We also present evidence on the impact of macroeconomic factors, such as investment, inflation, saving, trade openness and financial liberalization, as key determinants of financial development in the MENA region, also reflecting a sharp contrast between bank and non-bank activity. Our results are robust to different specifications and different estimation techniques.
5 citations