Comparison of banking innovation in low-income countries: A meta-frontier approach
مقایسه نوآوری بانکی در کشورهای کم درآمد: یک رویکرد فرامرزی-2019
Financial innovation is a crucial factor behind many of the improvements in the financial sector that directly affect the economy in a positive way. Financial innovation may also alter financial intermediation and increase reliability and transparency. Research has demonstrated that levels of financial innovation are similar among high-income countries; however, research has shown that financial development differs substantially in low income countries regardless of the economic size, suggesting that financial innovation may also differ. This study evaluated the levels of financial innovation and the determinants of innovation within the low-income countries. In particular, a new two-step meta-frontier approach was constructed to estimate technology gap ratios, and a censored model was built to establish their determinants. The results show that low-income countries do in fact vary greatly in terms of financial innovation. Competition, financial inclusion and banking access constitute major determinants of financial innovation.
Keywords: Financial innovation | Technology gap ratio | Cost efficiency | Stochastic meta-frontier analysis | Low-income countries
Remittance volatility and financial sector development in sub-Saharan African countries
نوسانات حواله و توسعه بخش مالی در کشورهای جنوب صحرای آفریقا-2019
In this study we examine the relationship between remittances, remittance volatility and financial sectordevelopment in sub-Saharan Africa using a two-step system GMM estimator over the period 2002–2014.Separately focussing on banking sector- and stock market development, our study distinguishes betweenthe effect of remittances and remittance volatility on financial sector depth and financial sector efficiency.The results indicate remittances act as a substitute for the formal banking system in sub-Saharan Africancountries. We further provide evidence that remittance volatility is detrimental to both banking sector depthand efficiency. No evidence is found that remittance volatility is related to stock market development. Apolicy implication from our study is that sub-Saharan African countries should have measures in place tomonitor the predictability of remittances while the cost of remittance transfer needs to be investigated.
Keywords: Remittance volatility | Financial development | Panel data
Banking development, socioeconomic structure and incomeinequality
توسعه بانکی ، ساختار اقتصادی اقتصادی و نابرابری درآمدی-2019
Article history:Received 9 January 2017Received in revised form 1 August 2017 Accepted 9 August 2017Available online 11 September 2017JEL: G21 G38 O15Using rich, unique data from the Italian local credit markets (provinces), this paper inves- tigates the impact of local banking development on income inequality and the role of the socioeconomic structure in this link. Exploiting the Italian historical banking regulation to instrument for the local presence of bank branches, we ﬁnd that local banking develop- ment mitigates income inequality. However, the ﬁnance-inequality nexus manifests itself only in relatively advanced areas. When we study the structural channels of inﬂuence, we uncover evidence that banking development can reduce inequality by affecting geograph- ical mobility and urbanization, while it has modest effects through the development of material infrastructures and human capital.Keywords:Income inequality Financial development Socioeconomic structure© 2017 Elsevier B.V. All rights reserved.
Keywords:Income inequality | Financial development | Socioeconomic structurea
Reassessing the law, finance, and growth nexus after the recent Great recession
ارزیابی مجدد قانون ، مالی و پیوند رشد پس از رکود اقتصادی بزرگ اخیر-2019
The paper provides a reassessment of the relationship between financial structure, finan- cial development, and economic growth conducting cross-section and panel econometric analyses for a sample of 62 countries over 1980–2016. In line with the traditional litera- ture, we confirm the existence of a positive cross-country relationship between the legal system, financial development, and growth even including the experience of the recent Great recession; in addition, when jointly assessing the effect of financial structure and financial development on growth, it emerges that a more bank-oriented economy enjoys higher benefits, in terms of long-run real GDP per capita growth, than a market-oriented one. When we consider variations across countries and over time, we find that both fi- nancial structure and financial development affect growth but in an opposite way as the cross-section analysis. In particular, when we control for their joint effect on growth, we observe a positive impact of market-based financial systems, and a negative impact of the overall financial development. We also provide evidence of the existence of a positive and significant relationship between economic growth and Shadow banking during the 2002—2016 period, highlighting the crucial role played by non-bank financial intermediation in complementing traditional banking and in affecting the real economy.
Keywords: Economic growth | Financial structure | Financial development | Legal institutions | Shadow banking
The role of stock market and banking sector development, and renewable energy consumption in carbon emissions: Insights from G-7 and N-11 countries
نقش توسعه بازار سهام و بخش بانکی و مصرف انرژی تجدید پذیر در انتشار کربن: بینش کشورهای G-7 و N-11-2019
This study probes the role of disaggregated financial development and renewable energy in carbon emissions by incorporating gross fixed capital formation and economic growth in the function of carbon emissions. The financial development is measured through the stock market and banking sector development. We also examine the validity of the EKC hypothesis, using the data of G-7 and N-11 countries spanning from 1990 to 2016. The integration properties of the considered variables are examined through second generation unit roots tests. The Lagrange Multiplier (LM) bootstrap panel cointegration method has confirmed the long-run equilibrium relationship among the variables for all the four models used. The long-run elasticity results suggest that renewable energy increases environmental quality by reducing carbon emission intensity for both groups of panel countries. Banking development index decreases carbon emissions in G-7 countries, while increases carbon emissions in N-11 countries. Similarly, stock market development index increases carbon emissions in G-7 countries, while decreases in N-11 countries. Overall, economic growth and fixed capital formation impede environmental quality by accelerating the intensity of carbon emissions. This study suggests policy implications based on the empirical results for both groups of countries.
Keywords: Carbon emissions | Stock market | Banking development | Renewable energy | Economic growth
Growing up without finance
رشد بدون مالی-2019
Early life exposure to local financial institutions increases household financial inclusion and leads to long-term improvements in consumer credit outcomes. We identify the effect of local financial markets using Congressional legislation that led to unintended differences in financial market development across Native American reservations. Individuals from finan- cially underdeveloped reservations enter consumer credit markets later, and upon reaching adulthood, have ten point lower credit scores and four percentage point more delinquent accounts. These effects are long-lived and depreciate slowly after individuals move to more developed areas. Formative exposures to local banking improve consumer credit behavior by increasing financial literacy and financial trust.
Keywords: Household finance | Native American reservations | Formative exposures | Financial development | Local banking
Banking reform and industry structure: Evidence from China
اصلاحات بانکی و ساختار صنعت: شواهدی از چین-2019
The development of a country’s financial sector plays an important role in shaping its industrial struc- ture; however, evidence on the micro level channels through which this relationship appears remains relatively sparse, particularly for developing countries. We examine the banking sector’s role in the in- dustrial structure in China by exploiting a quasi-experimental shock from a banking sector reform in 2002 that entailed stricter capital and asset requirements. Based on longitudinal data on manufacturing firms and registered banks from 1998 to 2008, we find that banking reform reduced concentrations in the product market by encouraging the growth of smaller and younger firms. These effects were most pro- nounced in regions with lower levels of financial development prior to the reform. Our results are robust after considering alternative model specifications and measures of dependence on external financing.
Keywords: Bank reform | China | Difference-in-differences | Industry structure
Foreign booms, domestic busts: The global dimension of banking crises
رونق خارجی ، شکاف داخلی: بعد جهانی بحران های بانکی-2019
This paper provides novel empirical evidence showing that foreign financial developments are a powerful predictor of domestic banking crises. Using a new data set for 38 advanced and emerging economies over 1970–2011, we show that credit growth in the rest of the world has a large positive effect on the probability of banking crises taking place at home, even when controlling for domestic credit growth. Our results suggest that this effect is larger for financially open economies, and is consistent with transmission via cross-border capital flows and market sentiment. Direct contagion from foreign crises plays an important role, but does not account for the whole effect
Keywords: Financial crises | Global credit cycle | Banking | Financial stability | Sentiment
Financial structure, bank competition and income inequality
ساختار مالی ، رقابت بانکی و نابرابری درآمدی-2019
This paper empirically investigates the contribution of finance to income inequality with particular emphasis on the role of financial structure (i.e., stock market orientation) and banking market structure (bank market power), an aspect that has been overlooked in the literature. It employs recently developed cointegration techniques that take into account cross-section correlation and simultaneity in non-stationary panels. The paper finds that income inequality increases with financial deepening but decreases with a more market-oriented financial system. It is also found that greater concentration, less competition in the banking sector strengthens income inequality. These effects are found stronger during the banking crisis period, for high-income countries or countries with better quality of political institutions. The data thus suggest that financial reform toward promoting stock market development, enhancing competition or lessening concentration in the banking sector is beneficial to income distribution.
Keywords: Income inequality | Financial development | Financial structure | Concentration | Competition
Taming financial development to reduce crises
تهمت توسعه اقتصادی برای کاهش بحران-2019
This paper assesses whether and how financial development triggers the occurrence of banking crises. It builds on a database that includes financial development as well as financial access, depth and efficiency for almost 100 countries. Through estimation of a dynamic logit panel model, it appears that financial development, from an institutional dimension and to a lesser extent from a market dimension, triggers financial stability within a 1- to 2-year horizon. Additionally, whereas financial access is destabilizing for advanced countries, it is stabilizing for emerging and low incomes ones. Both results have important implications for macroprudential policies and financial regulations.
Keywords: Financial development | Banking crises | Regulation