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.

Building Capacity for Domestic Resource Mobilization in African Countries

Abstract: This chapter identifies six major constraints retarding capacity building for domestic resource mobilization in African countries, namely, low disposable incomes; pervasive corruption; underdeveloped financial systems; tax policy weaknesses; legal system inadequacies; and low support of the population in addressing some governance problems. To overcome these constraints, this chapter elaborates on the following suggestions to policy makers in the continent: address corruption resolutely; improve the policy environment for economic growth; stress private sector development; address core financial sector development issues; address tax policy; pursue legal system reform; raise government efficiency in project selection and service delivery; and enhance appropriate cooperation internationally and domestically.

Information Asymmetry and Conditional Financial Sector Development

Abstract: Purpose- The purpose of this study is to examine the role of reducing information asymmetry (IA) on conditional financial sector development in 53 African countries for the period 2004-2011. Design/methodology/approach- The empirical evidence is based on contemporary and non-contemporary quantile regressions. Instruments for reducing IA include pubic credit registries (PCRs) and private credit bureaus (PCBs). Hitherto unexplored dimensions of financial sector development are employed, namely: financial sector dynamics of formalization, informalization, semi-formalization and non-formalization. Findings- The following findings are established. First, the positive (negative) effect of information sharing offices (ISO) on formal (informal) financial development is consistent with theory. Second, ISOs consistently increase: (i) formal financial development, with the incidence of PCRs higher in terms of magnitude and (ii) financial sector formalization, with the impact of PCBs higher for the most part. Third, only PCBs significantly decrease informal financial development and both ISOs decrease financial sector informalization. Policy implications are discussed. Originality/value- The study assesses the effect of reducing information asymmetry on financial development when existing levels of it matter because current studies based on mean values of financial development provide blanket policy implications which are unlikely to be effective unless they are contingent on prevailing levels of financial development and tailored differently across countries with high, intermediate and low initial levels of financial development.

The Basel Capital Requirement, Lending Interest Rate, and Aggregate Economic Growth: An Empirical Study of Viet Nam

Abstract: In recent years, the Vietnamese economy has shown signs of financial distress, and especially small banks have experienced serious liquidity and solvency problems. Based on the new policy of the State Bank of Vietnam, in order to ensure safe and effective banking operations, the Basel II accord will be widely applied to the whole banking system by 2018. This paper investigates the effects of the Basel II capital requirement implementation in Viet Nam on the bank lending rate and national output. The paper provides a theoretical framework as well as empirical model by developing a Vector Error Correction Model (VECM) over the period 2018 to 2016 by employing three groups of indicators (macroeconomics, banking, and monetary). The main finding of the paper is that at the bank level, a tightening of regulatory capital requirements does not induce a higher lending rate in the long run. Also, changes in micro-prudential capital requirements on banks have statistically significant spillovers on the GDP growth rate in the short term; yet, their effects significantly lessen over a longer period.

Foreign direct investment and economic growth: The role of financial development

Abstract: Abstract This study was conducted with the aim of examining the role of financial development in the impact of foreign direct investment on economic growth. The interesting point of this study is expressed through the effort to determine the level of financial development to maximize the spillover effects of foreign direct investment on economic growth, whereby financial development is measured through the development of the banking sector and the stock market. The data were collected from 6 countries of the Association of Southeast Asian Nations (ASEAN-6) in the period 2002–2019, including: Indonesia, Malaysia, Thailand, Singapore, the Philippines, and Vietnam. Regarding the method of analysis, this study uses threshold effects and system GMM to estimate research models. The estimation results show that there are threshold values of financial development through the banking sector (85.64%) and the stock market (21.95%). Furthermore, this study found a positive impact of foreign direct investment on economic growth in the regions before and after these threshold values. In particular, the positive impact of foreign direct investment on economic growth becomes stronger when financial development exceeds the defined threshold value. This result is found in the case where financial development is measured through both the banking sector and the stock market.

A reader in international corporate finance : volume one

Abstract: The Reader in International Corporate Finance offers an overview of current thinking on six topics: law and finance, corporate governance, banking, capital markets, capital structure and financing constraints, and the political economy of finance. This collection of 23 of the most influential articles published in the period 2000-2006 reflects two new trends: 1) interest in international aspects of corporate finance, particularly specific to emerging markets, and 2) awareness of the importance of institutions in explaining global differences in corporate finance.