FINANCIAL SYSTEM, FINANCIAL DEVELOPMENT AND FIRM SURVIVAL:

2019 ◽  
Keyword(s):  
Financial Development ◽  
Financial System ◽  
Firm Survival

scholarly journals Interaction between Financial Development and Sustainable Development, Evidence from Developing Countries: A Panel Data Study

2016 ◽  
Vol 8 (2) ◽  
pp. 243
Author(s):  
Badri Houda ◽  
Mazigh Jaidane Lamia
Keyword(s):  
Sustainable Development ◽  
Developing Countries ◽  
Panel Data ◽  
Financial Development ◽  
Banking Sector ◽  
Financial System ◽  
Complex Concept ◽  
Life Expectancy At Birth ◽  
Favorable Impression ◽  
Domestic Credit

Sustainable development is a complex concept of the world’s and is an major challenge for all countries. For that reason, some authors have argued the essential role of financial development to stimulate the various pillars of this concept, respectively, the economic pillar, ecological and social. The objective of this paper is to study how the financial system in developing countries contributes to the improvement of sustainable development, focusing particularly on the environmental pillar. Estimations are conducted with a panel data of 20 development countries over the period of 1995-2011 using Econometrics static panel. Our findings show that financial system in developing countries, generally has a favorable impression on Environmental, unfavorable effect for industrial investment and economic growth, but in contrast, in insignificant effect for domestic credit provided by banking sector relative to GDP and Life expectancy at birth, total (years).

The relationship between financial development and effectiveness of monetary policy: new evidence from ASEAN-3 countries

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Zulkefly Abdul Karim ◽  
Danie Eirieswanty Kamal Basa ◽  
Bakri Abdul Karim
Keyword(s):  
Monetary Policy ◽  
Money Supply ◽  
Financial Development ◽  
Open Economy ◽  
Banking Sector ◽  
Financial System ◽  
The Philippines ◽  
Output Growth ◽  
Content Type ◽  
The Relationship

Purpose This paper aims to investigate the relationship between financial development (FD) and monetary policy effectiveness (MPE) on output and inflation in ASEAN-3 countries (Singapore, Malaysia and the Philippines). Design/methodology/approach This study uses an open economy structural vector autoregressive model to generate MPE. Then, an autoregressive distributed lagged (ARDL) model is used to analyze the effect of FD on MPE across countries. Findings The findings revealed that FD plays a different role in MPE across countries. In Malaysia, a more developed financial system tends to reduce the MPE on output, whereas in Singapore, results show that the more developed financial system (stock market capitalization) tends to increase MPE on output. However, in the Philippines, the main results show that the effect of FD (liquid liabilities) upon MPE on output is depending on the policy variable (interest rates or money supply). Originality/value This paper fills this gap by providing the first study of ASEAN-3 countries in examining how effective is a monetary policy in response to the development of the financial market across the country. Second, this paper considers two FD indicators, namely, the banking sector and capital market development in investigating its effect on MPE on output and inflation. Third, the authors construct the MPE in each country using a structural (identified) VAR model by aggregating the response of output growth and inflation rate on monetary policy changes (interest rate and money supply) using impulse–response function. Regarding this, the results of this study provide new empirical evidence and insight into the long debate on the relationship between FD and the MPE.

scholarly journals Do Financial and Trade Openness Lead to Financial Sector Development in Nigeria?

2016 ◽  
Vol 19 (2) ◽  
pp. 57-68 ◽  
Author(s):  
Abayomi Toyin Onanuga ◽  
Olaronke Toyin Onanuga
Keyword(s):  
Financial Development ◽  
Method Of Moments ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Estimation Method ◽  
Financial System ◽  
Access To Finance ◽  
Global Capital ◽  
Financial Depth ◽  
The World

Abstract With so many countries of the world now open to global capital and trade, this study identifies whether financial and trade openness contribute to the development of Nigeria’s financial system by considering both financial depth and access to finance indicators. To achieve this objective, we applied the Simultaneous Openness Hypothesis as our theoretical framework and the Generalized Method of Moments (GMM) as our estimation method. Our findings reveal that opening trade while neglecting capital (vice versa) may be detrimental to the development of Nigeria financial system. In view of this evidence, we recommend that the simultaneous opening of trade and finance is a more guaranteed way of ensuring improved financial development in Nigeria.

scholarly journals Financial System and Agricultural Growth in Ukraine

Organizacija ◽  
2017 ◽  
Vol 50 (3) ◽  
pp. 244-253 ◽  
Author(s):  
Olena Oliynyk-Dunn
Keyword(s):  
Financial Development ◽  
Regression Models ◽  
Financial System ◽  
Value Added ◽  
Output Growth ◽  
Economic Activities ◽  
Agricultural Growth ◽  
Bank Deposits ◽  
Methodological Approaches ◽  
Integrated Indicators

Abstract Background/Purpose: An effective financial system should increase the efficiency of economic activities. This study provides evidence regarding the importance of financial development for agricultural growth in Ukraine. Methodology: We used non-integrated and integral indicators, time series and regression analysis to investigate the link between the financial development and agricultural growth. Results: The results based on integral indicators shows that the financial development does not affect agricultural growth in Ukraine. The study based on non-integrated indicators, which characterizes various aspects of the financial system’s banking component and agricultural growth, provided a significant link between the financial system and agriculture growth. The regression models revealed if bank deposits to GDP (%) increases the value added per worker in agriculture increases exponentially. The results of the study indicate that, agriculture is more sensitive to lending changes than the vast majority of other sectors of the economy. The increasing lending of one UAH (Ukrainian hryvnia) resulted in retail turnover growth of 1.62 UAH, while agricultural gross output, growth was UAH 5.06. Conclusion: Our results reveal a positive relationship between financial system’s banking component and agriculture growth in Ukraine. The results indicate the necessity for continued research into further developing universal methodological approaches of appraising the nexus of the financial system’s banking component on agriculture growth in general as well separate farm groups. The results of our study has important implications on policy making authorities efforts to stimulate agricultural growth by improving the efficiency of the financial system’s banking component.

Financial development and economic growth in Tanzania: an ARDL and bound testing approach

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Saganga Mussa Kapaya
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Time Series Data ◽  
Developing Economies ◽  
Financial System ◽  
Principal Component ◽  
Series Data ◽  
Content Type ◽  
Testing Procedures ◽  
Positive Effects

Purpose The purpose of this study is to empirically weigh the evidence for financial depth, liquidity and efficiency role to economic growth, and test for the existence of cointegration between financial development variables and economic growth in Tanzania. Design/methodology/approach The study used the autoregressive distributed lag model with bound testing procedures. The sample covered yearly time-series data from 1980 to 2017, i.e. 38 years. Findings The results suggest that financial system depth is positively related to economic growth in the short run and that financial system liquidity and efficiency is strongly negatively associated with economic growth both in the short and long run. Further, it is found that financial development is cointegrated with economic growth. Thus, financial reforms and liberalisation have not fully brought the desired positive effects on economic growth yet. Originality/value The study uses principal component analysis to capture specific dimensions within the financial system as an intuitive way to aggregate financial development effects. Unlike studies that included several countries with heterogeneous characteristics, which are sometimes difficulty to homogenise, in recognition of countries’ unique experiences, this study uses data from Tanzania as a specific case. It documents pertinent pieces of evidence for a developing economy necessary for financial policy adjustments post the financial and economic liberalisation and reforms period. It nevertheless sheds light on financial policies for other comparable developing economies during and after both financial and economic liberalisation settings.

FDI outflows, exports and financial development

2017 ◽  
Vol 44 (6) ◽  
pp. 987-1002 ◽  
Author(s):  
Long Zhao ◽  
Zuanshi Liu ◽  
William Wei ◽  
Bernadette Andreosso-O’Callaghan
Keyword(s):  
Financial Development ◽  
Financial System ◽  
Developed Countries ◽  
Theory Model ◽  
Production Model ◽  
Trade Theory ◽  
Content Type ◽  
Private Credit ◽  
Current Account Imbalances ◽  
New Perspective

Purpose The purpose of this paper is to argue that financial development, measured by private credit in the economy, affects exports in an inverted U-shaped manner. The authors use the new trade theory model and empirical data to analyze whether the financial system is the reason of global imbalance. Design/methodology/approach This paper builds a simple production model to connect financial development with a country’s export or outward foreign direct investment (ODI) decision. Using a panel data covering 108 countries for the period 1990-2011, the authors find strong evidence to show that when a country is at a lower financial development level, further advancements of its financial system will boost exports. Findings First, an inverted U-shaped relationship between exports, imports and financial development is found in the study of 108 countries over the period 1990-2011; second, ODI provides a substitute effect to exports for financially advanced countries. These findings have provided an alternative explanation to international trade imbalances and contribute constructively to the discussion regarding whether exports and financial development are positively related or not. Originality/value As a result, the findings shed some light on the issue of global current account imbalances between developing and developed countries from a new perspective.

scholarly journals Measuring the Level of Financial Development of U.E. Member Countries

2020 ◽  
Vol 2 (1) ◽  
pp. 221-232
Author(s):  
Alexandra Nastu ◽  
Stelian Stancu ◽  
Andreea Dumitrache
Keyword(s):  
Financial Development ◽  
Poverty Reduction ◽  
Composite Index ◽  
Financial System ◽  
Developed Countries ◽  
Literature Study ◽  
Eu Member States ◽  
Index Value ◽  
To Receive ◽  
Positive Index

Abstract A financial sector that is developed and well functional is a key component of an economy. Numerous articles in the literature study the influence of financial development on the poverty reduction or on the economic growth. However, this paper proposes to compare the level of financial development of EU member states, but also to discover a shortcut in defining the financial level of a country. The methodology that allows this is composed of three steps: creating a composite index based on the main principal components that measure the level of the financial system; creating a categorical variable based on the values of the index (financial developed countries have a positive index value and vice versa) and applying the Decision Trees algorithm to the extended dataset. The results of the study show an underdeveloped financial level for Romania, which is at the opposite pole from Luxembourg, the country with the highest level of the financial system. Among the definition patterns found, is the following condition: if the percent of accounts used to receive wages is greater than 49.74%, the saved using a savings club in the past year (%) is greater than 3.95%, the customer price index is greater than 106.99 and the debit card (%) is greater than 90.69%, then this indicate a good financial development level.

On building social capital for Islamic finance

2015 ◽  
Vol 8 (1) ◽  
pp. 2-19 ◽  
Author(s):  
Adam Ng ◽  
Mansor Ibrahim ◽  
Abbas Mirakhor
Keyword(s):  
Social Capital ◽  
Financial Development ◽  
Risk Sharing ◽  
Design Methodology ◽  
Empirical Studies ◽  
Financial System ◽  
Islamic Finance ◽  
Investment Opportunity ◽  
Content Type ◽  
Practical Implications

Purpose – The purpose of this paper is to set forth seven broad recommendations and 15 specific initiatives within a four-dimensional framework for the development of social capital in Islamic finance, particularly the stock market, given its role as the first best means of risk sharing. Design/methodology/approach – The four-dimensional framework comprises dimensions of principle and value, trust-reinforcing regulation, investment opportunity and infrastructure, as well as reputational intermediaries. Findings – A web of multi-pronged initiatives that are mutually reinforcing is proposed considering the multifaceted dimensions of social capital and the various possible transmission channels by which social capital can influence the financial system. Practical implications – While empirical studies have demonstrated the importance of trust and ethics in financial development, the pressing issue remains how social capital, including trust and ethics, can be developed to achieve a trustworthy, ethical and efficient financial system. This paper attempts to address this concern. Originality/value – This paper provides a framework for building social capital in Islamic finance.

scholarly journals EVALUATING THE EFFECT OF ISLAMIC FINANCING TO FINANCIAL DEVELOPMENT: EVIDENCE FROM OIC COUNTRIES

2019 ◽  
Author(s):  
Selamah Maamor ◽  
Hafnida Hasan ◽  
Hussin Abdullah
Keyword(s):  
Financial Development ◽  
Random Effect ◽  
Random Effect Model ◽  
Financial System ◽  
Islamic Finance ◽  
Finance Industry ◽  
Significant Relationships ◽  
Large Numbers ◽  
Effect Model ◽  
Two Factors

The development of Islamic finance is governed by Islamic laws (Shariah). The main principles that regulate all forms of transactions in Islamic banking activities include the prohibition of interest or usury (riba),the use of excessive risk (gharar), and gambling (maysir). The Islamic finance industry has become a prominent sector and is one of the fastest growing components of financial developments over the last decade in the global financial system. The availability of large numbers of Islamic finance products will increase significantlyas there have been a growing demand throughout the world, especially in OIC participating countries. Hence, the objective of this study is to identify the important factors that enhances financial development in the selected OIC countries (Malaysia, Indonesia, Jordan, Kuwait, Saudi Arabia, Sudan and Yemen). Three indicators of financial development were used; Islamic finance, broad money and liquid liabilities. The data used in this study is the panel data from the year 1990 to 2012 which were obtained from the International Monetary Fund, Islamic Banks and Financial Institutions Information (IBIS), and World Bank databases. This study employed pooled OLS, fixed and random effect model. The results indicate that there are significant relationships between Islamic finance and financial development. Specifically, this study found that liquid liabilities and Islamic finance are two factors that have significantly influenced financial development in the OIC countries. Furthermore, the findings suggest that the OIC governments are required to develop policies that would integrate Islamic finance into their financial system. These policies should be centred around regulatory framework and supervisory role to utilize Islamic finance for greater economic growth. Keywords: Islamic finance; financial development; OIC countries; pooled OLS, fixed effect; random effect

scholarly journals On the Causal Nature between Financial Development and Economic Growth in the Democratic Republic of the Congo: Is it Supply Leading or Demand Following?

2020 ◽  
Vol 11 (2) ◽  
pp. 96
Author(s):  
Christian P. PINSHI
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Democratic Republic ◽  
Financial System ◽  
Business Climate ◽  
Causality Test ◽  
Knowledge Infrastructure ◽  
Republic Of The Congo ◽  
Causal Nature ◽  
Using Data

This paper seeks to study and answer the question on the nature and direction of the causality between financial development and economic growth in the Democratic Republic of the Congo (DRC) using data from 2004 to 2019. The long-term relationship not being robust, we opted for the short-term dynamics with the causality test in the sense of Granger to support this question. The results indicated the existence of a one-way causality from economic growth to financial development. This result is in line with the Demand following hypothesis, given the country’s economic and financial landscape, which presents a less deep financial system. Consequently, choices of growth policies (increase in knowledge, infrastructure, pleasant business climate, structural reforms, etc.) should be adopted to enhance and develop the Congolese financial system. However, we recognize that once growth is restored and becomes sustainable, financial development could lead to sustained and resilient economic growth.

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