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 authors examined the link between FDI, domestic financial system, and economic growth for Pakistan over the period of 1972-2005 and found that FDI inflows exerted positive impact on economic growth in the short-run and the long-run if the domestic financial systems had achieved a certain minimum level development.
Abstract: Recent theoretical and empirical literature suggests that
foreign direct investment (FDI) exerted positive impact on economic
growth through the process of technological diffusion. The literature
also suggests that the development of the domestic financial system of
the host country is an important pre-condition for FDI to have a
positive impact on economic growth. A welldeveloped domestic financial
sector enhances efficient allocation of financial resources and improves
the absorptive capacity of a country with respect to FDI inflows.
Particularly, a more developed financial system positively contributes
to the process of technological diffusion associated with foreign direct
investment. In this study, we examine the link between FDI, domestic
financial sector, and economic growth for Pakistan over the period
1972–2005. Empirical analysis is based on the bound testing approach of
cointegration advanced by Pesaran, et al. (2001). The results suggest
that FDI inflows exerted positive impact on economic growth in the
short-run and the long-run if the domestic financial system has achieved
a certain minimum-level development. The results further suggest that
better domestic financial conditions not only attract foreign companies
to invest in Pakistan, but also allow maximising the benefits of foreign
investment. JEL classification: F21, F36, F43, O16 Keywords: Foreign
Direct Investment, Financial Sector Development, Economic Growth,
Technology Spillovers
102 citations
TL;DR: In this paper, a comprehensive database on bank ownership for 137 countries over 1995-2009, and reviews foreign bank behavior and impact is presented, showing substantial increases in foreign bank presence, with many more home and host countries.
Abstract: This paper introduces a comprehensive database on bank ownership for 137 countries over 1995-2009, and reviews foreign bank behavior and impact. It documents substantial increases in foreign bank presence, with many more home and host countries. Current market shares of foreign banks average 20 percent in OECD countries and 50 percent elsewhere. Foreign banks have higher capital and more liquidity, but lower profitability than domestic banks do. Only in developing countries is foreign bank presence negatively related with domestic credit creation. During the global crisis foreign banks reduced credit more compared to domestic banks, except when they dominated the host banking systems.
100 citations
TL;DR: In this paper, the authors investigated the relationship between financial development and income distribution and uncovered a significant causality running from financial sector development to income distribution, and the banking sector seems to exert a stronger impact on inequality.
Abstract: This paper analyzes the under-investigated relationship uniting financial development and income distribution. We use a novel approach taking into account for the first time the specific channels linking banks, capital markets and income inequality, the time-varying nature of the relationship, and reciprocal causality. We construct a set of annual indicators of banking and capital market size, robustness, efficiency and international integration. We then estimate the determinants of income distribution using a panel Bayesian structural vector autoregressive (SVAR) model, for a set of 49 countries over the 1994-2002 period. We uncover a significant causality running from financial sector development to income distribution. In addition, the banking sector seems to exert a stronger impact on inequality. Finally, the relationship appears to depend on characteristics of the financial sector, rather than on its size.
99 citations
TL;DR: In this paper, a broad-based approach is proposed to reveal important determinants and regularities of the process of financial development and identify some of the main data gaps that will need to be filled to allow further progress in financial benchmarking looking forward.
Abstract: Capitalizing on recent improvements in the availability of cross-country financial sector data, this paper proposes a standard methodology for benchmarking the policy component of financial development. Systematic controls are introduced to isolate main structural country characteristics and a principal components analysis is used to help identify a parsimonious set of ten "core" outcome indicators from a broader set of twenty seven potential indicators covering different dimensions of development in both financial institutions and financial markets. Such a broad-based approach helps reveal important determinants and regularities of the process of financial development. The paper also identifies some of the main data gaps that will need to be filled to allow further progress in financial benchmarking looking forward.
99 citations
Journal Article•
TL;DR: The authors provides an extensive review of growth, inequality and poverty reduction in the East Asian miracle economies, and suggests that the basic impetus for poverty reduction was robust economic growth, which was fostered by a conducive policy and institutional framework.
Abstract: This paper provides an extensive review of growth, inequality and poverty reduction in the East Asian miracle economies. This review suggests that the basic impetus for poverty reduction was robust economic growth, which was fostered by a conducive policy and institutional framework. This framework - which helped to create a 'level playing field' - encouraged high investment, production over diversion, and efficient use of investable resources
99 citations