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.

Financial development and foreign direct investment nexus: A systematic review of literature

Abstract: In this study, we review the literature to find how the financial development of a country attracts foreign direct investments for a sustainable real sector development of the country. The area is least focused on literature. Thus we don’t limit our search and review to any time or database or journal category. We find the theoretical logic and empirical evidence so far available in the literature. Our review finds that the development of the financial sector of a country is one of the most important attractors of FDIs. Theoretically, financial sector development works as a symbol of trust and goodness to the new potential investors and a good resource allocation channel for the existing investors. However, very few researchers find that FDIs are more prone to countries with a low developed financial system which may happen due to the presence of risk-taker foreign investors and risk-averse domestic entrepreneurs.

Nexus between remittance outflows and economic growth in GCC countries: the mediating role of financial development

Abstract: An important but underestimated area in international economics is the study of the impacts of remittance outflows and financial development on the economic growth of the remitting countries. This study explores how remittance outflows and financial development can affect the economic growth of the Gulf Cooperation Council (GCC) region using panel data from 1999 to 2018. The outcome reveals that remittance outflows are negatively related to economic growth. While financial development is effective in stimulating economic growth and is significant, the moderating role of financial development is growth-enhancing in the GCC region. Our findings are robust and insensitive to different econometric techniques. To benefit from immigrants, this research suggests a stimulus policy that GCC countries should facilitate foreign workers to settle sustainably and participate in investment activities, and increase consumption in their host country.

Before main banks : a selective historical overview of Japan's prewar financialsystem

Abstract: Among lessons learned from Japan's prewar financial system: Business conglomerates that did not remain dependent on government patronage were more successful than others in making the transition to a modern industrial economy. And banks that made a conscious effort to reduce their dependence on central bank credit were more successful than those that did not. The postwar experience of the Japanese banking system has received considerable attention recently partly because conditions in defeated Japan in 1945 (including high inflation and the need to switch from a military to a civilian economy) are similar to those in transition economies today. Policymakers in transition economies can learn a good deal from the experiences of Japan's postwar financial system but should remember that Japan also experienced extraordinary industrial growth and financial institution building in the late nineteenth and early twentieth centuries. Lessons to be learned from that experience include the following: ° Business conglomerates that did not continue to depend on government patronage were more successful than others in making the transition to a modern industrial economy. ° Banks that made a conscious effort to reduce their dependence on central bank credit were more successful than those that did not. ° The establishment of procedures for punishing defaulting borrowers helped the development of the payments system. ° Limits on the amount of lending to related parties appear to have contributed to financial stability (and could have contributed more if the newer zaibatsu had been as prudent as the older ones). ° Bank bailouts without accompanying reform (such as those the Bank of Japan undertook in 1920 and 1922) probably increased the likelihood of a more serious crisis, such as that of 1927. ° Capital standards - the minimum capital requirements established in the 1927 law - were a viable means of encouraging bank consolidation and more prudent lending. ° The public financial system served as a buffer when the banking sector was downsized. This paper - a joint product of the Finance and Private Sector Development Division, Policy Research Department, and the Financial Sector Development Department - was presented at a Bank seminar, Financial History: Lessons of the Past for Reformers of the Present, and is a chapter in a forthcoming volume, Reforming Finance: Some Lessons from History, edited by Gerard Caprio, Jr. and Dimitri Vittas.

International Experience of Capital Flows Liberalization

Abstract: In this research we concentrate on such instruments of regulatory policy as restrictions for capital flow and currency regulation. The study highlights the international experience of managing capital flows, considers the consequences of policies to manage capital flows and currency regulation in the world, and summarizes the recommendations of international financial institutions in this regard. Given the globalization of economic processes and the high level of openness in the Ukrainian economy, a strategic goal of currency regulation reform in the country has to be the gradual liberalization of capital flows. This is particularly observed in the Association Agreement with the EU and other documents. In order to take full advantage of liberalization and minimize the risks associated with volatile capital flows, it is necessary to implement a series of measures aimed at improving institutional capacity to manage the effects of both the inflow and outflow of capital in the intermediate stages of liberalization. The approach generally corresponds to the Comprehensive Program for Financial Sector Development in Ukraine Until 2020, the IMF, and the Memorandum of Association Agreement between Ukraine and the EU.

Financial sector development and economic growth: a co-integration analysis for ASEAN countries

Abstract: Among the 17 sustainable development goals (SDGs) of the United Nation, the 8th goal emphasises economic growth as an essential means of achieving other SDGs especially in developing countries. Therefore, this study empirically investigates the role of financial sector development, among other relevant factors, in the economic growth of five ASEAN economies over the 1994-2017 period. It uses Kao and Fisher-Johansen co-integration tests to examine the presence of a long-run association among the variables. Furthermore, FMOLS method is used to determine the long-run estimates of the predictors' influences on the economic growth of those countries. The long-run outcomes of the estimation suggest that financial sector development and human development index have significant positive impact on the economic growth of those countries. Based on the findings, this study recommends ASEAN countries to embrace additional robust measures to improve the financial sector and human development in order to realise sustainable economic growth.