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.

Growth-Effects of Inflation Targeting: The Role of Financial Sector Development

Abstract: The paper develops a dynamic general equilibrium monetary endogenous growth model. The closed economy model is inhabited by consumers, firms, a Cournotian monopolistically competitive banking system, besides, an inflationtargeting monetary authority, and, in turn, analyzes the effect of a tight monetary (disinflationary) policy on growth. We show that the effect of a lower inflation target on growth is ambiguous, with the ultimate effect depending on the initial levels of growth and the individual bank size, besides, a whole host of structural parameters defining the preferences and the production structure of the economy.

A re-examination of the finance-growth nexus for the MENA region using static and dynamic panel data

Abstract: This paper contributes to the existing empirics of finance-growth nexus of MENA countries based on a longer time period (1975-2012). It incorporates additional control variables such as FDI and an interaction term of FDI and financial development variables. It employed four estimation techniques, Pooled OLS, Fixed effect estimation, Random effect estimation, and the system GMM estimation, and used static and dynamic panel data. It obtains a robust finding of consistently no impact of financial sector development (FSD) on economic growth of MENA countries to all estimation techniques. The paper exemplifies that FSD especially, the banking sector has not been strong and efficient enough to effectively influence the economic growth. It strongly recommends the strengthening of the ongoing efforts of financial sector reforms, its supervision, monitoring and evaluation. The FDI effect on economic growth is positive and significant in all four estimation methods. Fixed capital formation contributes positively while trade openness and government expenditures have not played any significant role in the growth of MENA countries during the study period.

Credit channels of financial sector development and economic growth in nigeria

Abstract: The development of the Nigerian financial system has been scrutinized in the recent years as to whether the system support the growth of the economy according to financial sector development theories. However, the inability of previous studies to adequately pay attention to the credit channels of financial sector development necessitated this study. Thus, using data from 1986 to 2018, this study provide a nexus between credit channels of financial sector development and economic growth in Nigeria estimated with Autoregressive Distributed Lag technique (ARDL). Findings from the Bound Co-integration result suggested a long-run relationship between credit channels of financial sector development and economic growth in Nigeria. The study found and concluded that, credit to core sector and credit to government impede economic growth in the short, with credit to core sector stimulating economic growth in the long run. The study recommended that effective policies should be formulated to further allocate more credit to the core sector as major driver of economic growth. Credit allocated to government should be judiciously utilized for growth enhancing purposes.

An Assessment of Financial Sector Development in Bhutan

Abstract: This paper presents the results of an investigation into the performance and stability of Bhutan’s banking system. The study has found that economic growth has fueled a large demand for household credit over recent years, and in turn, banks have responded by substantially increasing their loan portfolios. Private sector credit growth took o from its earlier steady pace in the years preceding 2008, reaching over 40% growth year-on-year in the 2009-10 fiscal year, and has retained a relatively high growth rate even as heavy import restrictions remain in place. Although the largest recipient of credit is the building and construction sector, personal loans now make up more than 18% of credit extended to the private sector. And while non-performing loans have decreased substantially from their peak of close to 40% in the mid-1990s, they are still relatively high, and are decreasing as much due to total private sector credit growth as they are to loan recovery rates. Within this context, this paper discusses policy recommendations to strengthen and improve the banking sector. These policy measures include fostering banking sector competition, improving regulatory practices—on both the monitoring and the enforcement side—and enhancing risk diversification and liquidity management practices.