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 income inequality in South Africa

Abstract: The persistent inequality in South Africa has been the subject of considerable debate over two decades. This chapter examines the effect of financial sector development on income inequality in South Africa. Using cointegrating regressions (DOLS, CCR and FMOLS), the findings show the inverted U-shaped association between financial development and income inequality. This suggests that income inequality first rises as the financial sector develops but later declines with further development of the financial sector. The findings also show that irrespective of the level of growth and trade openness, financial sector development is crucial in reducing income inequality in the long run.

Poland’s financial sector development in terms of global financial transformations

Abstract: The paper deals with the study of global financial transformations impact on the financial sector in Poland. Two types of tendencies of the global financial space development that create new conditions for national financial systems are defined,including: trends that lead to qualitative shifts in countries’ financial systems and do not necessarily imply a negative impact on the national financial systems; threatening challenges that shatter financial markets and restrain their sustainable development. The current positions of Poland’s financial sector in the world and regional financial systems are evaluated. The shifts in the national financial sector in terms of global financial transformations are found out. It is stated that while integrating into the global financial space, Poland will increasingly feel the impact of global transformations that will determine further scenarios for the domestic financial sector development. Exogenous factors that can aggravate challenges threatening the stability of Poland’s financial sector in the near future are identified.

Determinants of portfolio equity flows to Sub-Saharan Africa

Abstract: Purpose The purpose of this paper is to investigate the determinants of portfolio equity flows to the Sub-Saharan African (SSA) region over the period 1996-2010. Design/methodology/approach The study uses a sample of 14 SSA countries to estimate the baseline regression through employing the system generalized methods of moment dynamic panel estimation framework. To check the robustness of the estimation results, the study further analyses the data set using the random effects-generalized least squares (EGLS) estimator. The Random effects-generalized least squares estimator is also referred to a the Estimated Generalized least Squares (EGLS) estimator. Findings The paper finds a significant positive relationship between financial development and portfolio equity flows. Furthermore, while the study surprisingly finds trade openness to have a significant negative relationship, political stability is found to have a significant positive relationship with portfolio equity. To check for the robustness of these results, the authors further analyse the data set using the random EGLS estimator. The result of the EGLS estimator confirms that there is a robust positive relationship between financial development and portfolio equity flows to SSA. However, the results suggest that neither trade openness nor political stability is a robust determinant of portfolio equity flows to the sub-region. Practical implications Policy measures should aim at enhancing financial sector development, political stability and rule of law. A transparent judicial system that enhances rule of law and deepens democratic governance in countries in the sub-region is critical, but even more critical is deepening the financial sector, given the important role financial development plays in portfolio equity flows as suggested by the findings. A range of measures and appropriate policy responses are therefore needed for countries that have to manage macroeconomic and financial stability risks to deepen the financial sector. Originality/value Most studies on private capital flows to SSA have focussed on foreign direct investment flows with no or scanty evidence on the drivers of portfolio equity flows. This study fills this gap in the literature.

Does Supply-Leading Hypothesis Holds in South Africa? Evidence from ARDL Estimation Technique

Abstract: . Using ARDL bound test procedure the present study investigates whether economic growth influences financial sector development through stock market development in South Africa for the period of 2005 to 2014.The finding shows that growth of the economy enhances financial sector development through stock market medium in South Africa both in short run and long-run phenomenon. The finding confirmed the existence of Joan Robison (1952) supply leading hypothesis in the country investigated. The policy implication is that the authority in this country needs to put additional efforts in policies that will boost the overall performance of the economy considering its positive influence on financial sector development via stock market boost. Effective policies that will enhance the competitiveness of the stock market performance are essential ingredient that will boost the performance of the stock market and hence will have multiplier effect on the overall economy. Keywords. Financial Development, Economic growth, ARDL, Cointegration, South Africa. JEL. F40, F43, F63.

The Effect of Financial Development on Unemployment in Nigeria: Do Measures of Financial Development Matter?

Abstract: The goal of every government is to provide decent employment for its citizenries. This goal has, however, become unattainable in many countries, particularly in developing countries, including Nigeria. As a result, several empirical studies have been conducted with the goal to find macroeconomic variables that are positively (negatively) correlated with the employment (unemployment) so that government can direct its policy arsenals towards that direction. However, few empirical investigations have been conducted on how financial development relates to unemployment in the short-run and the long-run, taking into consideration different measures of financial development. This is the aim of this study. Using various financial development indicators and employing ARDL as a method of estimation, it was found that only financial system deposit to GDP has a potential to reduce the unemployment rate in the short-run and the long-run. Other financial indicators such as credit to private sector, financial liquidity, financial efficiency and financial stability only reduce the unemployment rate in the short-run. We also found that financial development and unemployment rate (including inflation rate and real GDP) are cointegrated. The results we attributed to the level of financial sector development in Nigeria compared with the level of financial sector development in Emerging and Developed Countries. Based on this, it is important for the authority to further strengthen and deepen the financial sector through proper supervisions and regulations, as well as formulation and implementation of appropriate policies so that the sector can perform its intermediary role effectively and efficiently in the economy.