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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: The authors showed that financial depth is negatively associated with headcount poverty, even after taking account of mean income and inequality, illustrating the pitfalls in equating financial development with financial depth and proposing alternative measures of financial development that capture its multidimensional nature.
Abstract: The causal link between finance and growth is one of the most striking empirical macroeconomic relationships uncovered in the past decade. As this branch of the literature matures, the focus shifts from growth to other aspects of economic prosperity and from financial depth to multidimensional measures of financial development. This paper reviews the evolution of the literature and contributes by (i) showing that financial depth is negatively associated with headcount poverty, even after taking account of mean income and inequality; (ii) illustrating the pitfalls in equating financial development with financial depth and (iii) proposing alternative measures of financial development that, though summary, capture its multidimensional nature.
377 citations
Book•
01 Jan 2007TL;DR: In this paper, the authors present a coherent policy approach that addresses African priorities and can work in African conditions, which challenges the applicability of some conventional views on a range of issues from securities markets and banking regulation to the organization of micro finance institutions.
Abstract: Making Finance Work for Africa presents a coherent policy approach that addresses African priorities and can work in African conditions. It challenges the applicability of some conventional views on a range of issues from securities markets and banking regulation to the organization of microfinance institutions. The authors identify promising trends from across sub-Saharan Africa and pinpoint shortcomings. The book will be useful to policy makers, bankers, financial analysts, and economists working in Africa.
326 citations
TL;DR: In many developing countries less than half the population has access to formal financial services, and in most of Africa less than one in five households has access as discussed by the authors. But not all government actions are equally effective and some policies can even be counterproductive.
Abstract: In many developing countries less than half the population has access to formal financial services, and in most of Africa less than one in five households has access. Lack of access to finance is often the critical mechanism for generating persistent income inequality, as well as slower economic growth. Hence expanding access remains an important challenge across the world, leaving much for governments to do. However, not all government actions are equally effective and some policies can even be counterproductive. This paper sets out principles for effective government policy on broadening access, drawing on the available evidence and illustrating with examples. The paper concludes with directions for future research.
312 citations
TL;DR: The overall impact of financial globalization on the domestic financial sector is profound as mentioned in this paper, and the consequences have not been uniformly favorable, as domestic interest rates in developing countries have moved to a premium over industrial country rates, and can surge at times of currency speculation.
Abstract: The overall impact of financial globalization on the domestic financial sector is profound. Liberalization of capital flows has effectively made domestic financial repression obsolete. The consequences have not been uniformly favorable. Following liberalization, domestic interest rates in developing countries have moved to a premium over industrial country rates, and can surge at times of currency speculation. Heightened interest rate and exchange rate volatility pose practical risk management difficulties for financial intermediaries and reinforce the need for appropriate infrastructures and incentives for risk containment, as well as for good macropolicies. On the other hand, the cost of equity capital has been reduced by allowing foreign investor access to local equity markets and allowing local firms to list abroad. Increased international flows through the equity markets have not been the major contributor to increased international sources of volatility. In addition to opening access to foreign-sourced financial services, more and more countries have been permitting foreign-owned banks and other financial firms to operate locally. Although this can represent a threat to domestic owners of financial firms, the drawback is outweighed by improved service quality. On all three fronts--debt, equity, and services--the costs and risks as well as the benefits of increased financial globalization. knowledges
299 citations
TL;DR: In this paper, the authors examined the contribution of financial development to poverty reduction in low-income countries and reported that financial sector development policy can contribute to achieving the goal of poverty reduction.
Abstract: Empirical investigation of the link between financial development and economic growth has established that finance exerts a significant and positive influence on growth. This paper extends this line of analysis by examining the contribution that financial development makes to poverty reduction in low-income countries. The results reported support the contention that financial sector development policy can contribute to achieving the goal of poverty reduction in developing countries. Copyright © 2002 John Wiley & Sons, Ltd.
285 citations