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on Financial Development and Growth |
| By: | Vitor Castro (Faculty of Social Sciences, Charles University, Prague, Czech Republic & Institute of Economic Research, Slovak Academy of Sciences, Bratislava); Boris Fisera (Faculty of Social Sciences, Charles University, Prague & Institute of Economic Research, Slovak Academy of Sciences, Bratislava) |
| Abstract: | This paper explores the effect of financial development on the duration of economic recoveries, considering a sample of 414 economic recoveries observed in 67 countries during the period 1989-2019. We define the duration of economic recovery, as the time it takes the economy to return to its potential output level. Using a continuous-time Weibull duration model, we find that a higher level of financial development tends to prolong the duration of economic recovery. Therefore, our findings indicate that a too highly developed financial system might delay a full recovery after a recession, supporting the notion that there is ´too much financeâ´. In particular, greater size of the underregulated sector of non-banking financial institutions (shadow banks) prolongs the economic recovery. Moreover, the emerging economies, with their generally poorer regulatory frameworks, are more negatively affected by ´too much finance´. Underlining the importance of an effective regulation of the entire financial system, our results also confirm that a higher regulatory quality limits the negative consequences of ´too much finance´. |
| Keywords: | economic recovery, duration analysis, Weibull duration model, financial development, too-much-finance |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:fau:wpaper:wp2022_33&r=fdg |
| By: | Islam, Mohammad Mohidul |
| Abstract: | Considering the importance of economic development in attracting Foreign Direct Investment (FDI) inflows to the developing economies, this study aims to investigate the relationship between FDI inflows and economic development in Bangladesh using annual time series data for the period of 1991 to 2020. The empirical analysis is performed employing the Autoregressive Distributed Lag (ARDL) bound test method in order to find out the long-run as well as the short-run relationship between FDI inflows and economic development. The empirical evidence from the study indicates that the economic development indicator does not have any statistically significant positive relationship with FDI inflows in the long-run. Other variables, namely the interest rate and export receipts, have a significant statistical relationship with FDI inflows, and the right direction of these two variables in terms of the expected sign of the coefficients shows that to some extent there has been an insightful economic relationship. However, in the short-run, such a relationship between FDI inflows and economic development is statistically justified, where the negative coefficient of the error correction term indicates the dynamic adjustment to the long-run equilibrium has been found to be made in a consistent manner, which is supported by the statistical theory. Finally, this study also suggests that the government should take proper measures to attract higher FDI inflows in order to ensure the faster socio-economic development of the country as a whole. |
| Date: | 2022–12–18 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:tehuf&r=fdg |
| By: | Huong, Pham Thu |
| Abstract: | Vietnam continuously liberalizes the financial market as a requirement for its accession to the World Trade Organization in 2007. This paper discusses the foreign investors’ expectation and their experience when penetrating into Vietnam’s market. The role of the foreign entrants is also assessed. By synthesizing and analyzing relevant research and reports, several important insights are discovered. Firstly, the presence of foreign investors and banks improves market competition, efficiency, and stability. Wholly and partly foreign-owned banks provide the spillover effects in management quality, in the introduction of world standard banking products and services, and in the application of information technology. Secondly, by looking into the foreign owned banks, it is found that the banks’ foreign investors are not likely to play an influential role in managing the banks they invested in. The motive of the investors to control the invested companies leads to their decision of holdings withdrawing. |
| Date: | 2022–11–29 |
| URL: | http://d.repec.org/n?u=RePEc:osf:osfxxx:fkhbt&r=fdg |
| By: | Gustavo Joaquim; Felipe Netto; José Renato Haas Ornelas |
| Abstract: | We study a large-scale quasi-experiment in the Brazilian banking sector characterized by an unexpected and macroeconomically relevant increase in lending by commercial government banks. Using credit registry data, we find that this intervention led to a reduction in lending rates, but it did not lead to a change in private banks’ credit supply. Firms reliant on government banks experienced a substantial increase in debt, and government banks faced a large increase in loan defaults driven by indebted firms. We find a small increase in employment at the firm level, suggesting limited direct benefits of the intervention. At the regional level, we find that branch presence cannot explain credit growth due to cross-market borrowing. Once we account for this channel, we find real effects at the regional level that are substantially larger than those at the firm level, emphasizing the general-equilibrium effects of large-scale interventions. |
| Keywords: | credit market interventions; credit supply shocks; government banks |
| JEL: | E44 E65 G21 G28 |
| Date: | 2022–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedbwp:95343&r=fdg |
| By: | Haselmann, Rainer; Sarkar, Arkodipta; Singla, Shikhar; Vig, Vikrant |
| Abstract: | Increased interdependencies across countries have led to calls for greater harmonization of regulations to prevent local shock from spilling over to other countries. Using the rulemaking process of the Basel Committee on Banking Supervision (BCBS), this paper studies the process through which harmonization is achieved. Through leaked voting records, we document that the probability of a regulator opposing an initiative increases if their domestic national champion (NC) opposes the new rule, particularly when the proposed rule disproportionately affects them. Next, we show that smaller banks, even when they collectively have a higher share in the domestic market, do not have any impact on regulators' stand - suggesting that regulators' support for NCs is not guided by their national interest. Further, we find the effect is driven by regulators who had prior experience working in large banks. Finally, we show this unanimous decision-making process results in significant watering down of proposed rules. Overall, the results highlight the limits of harmonization of international financial regulation. |
| Keywords: | Political Economy, Financial Regulation, Textual Analysis |
| JEL: | P43 G28 G21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:45&r=fdg |
| By: | Haselmann, Rainer; Singla, Shikhar; Vig, Vikrant |
| Abstract: | We exploit the establishment of a supranational supervisor in Europe (the Single Supervisory Mechanism) to learn how the organizational design of supervisory institutions impacts the enforcement of financial regulation. Banks under supranational supervision are required to increase regulatory capital for exposures to the same firm compared to banks under the local supervisor. Local supervisors provide preferential treatment to larger institutes. The central supervisor removes such biases, which results in an overall standardized behavior. While the central supervisor treats banks more equally, we document a loss in information in banks' risk models associated with central supervision. The tighter supervision of larger banks results in a shift of particularly risky lending activities to smaller banks. We document lower sales and employment for firms receiving most of their funding from banks that receive a tighter supervisory treatment. Overall, the central supervisor treats banks more equally but has less information about them than the local supervisor. |
| Keywords: | Financial Regulation, Financial Supervision, Banking Union |
| JEL: | G21 G28 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:46&r=fdg |
| By: | Olivier Najar,; Pascale Scapecchi; et Ysaline PADIEU |
| Abstract: | From 2010 to 2019, the international community committed USD 1, 700 billion in loans for developing countries. While multila-teral development banks continued to provide the bulk of financings (60% of the total), close to 20% came from relatively new actors, amongst which the BRICS countries – primarily China, Russia and, to a lesser extent, India – played a significant role.This paper presents different issues associated with the relative rise of three donors from the emerging world: China, India and Türkiye, looking at the circumstances which led to their emergence, their respective particularities and objectives, and their impact on the existing framework(s) used to define and measure official development assistance (ODA). |
| Keywords: | Chine, Inde, Turquie |
| JEL: | E |
| Date: | 2023–01–04 |
| URL: | http://d.repec.org/n?u=RePEc:avg:wpaper:en14502&r=fdg |
| By: | Cordella, Tito; Powell, Andrew |
| Abstract: | International financial institutions (IFIs) generally enjoy preferred creditors treatment (PCT). Although PCT rarely appears in legal contracts, when sovereigns restructure bilateral or commercial debts, they normally pay IFIs in full. This paper presents a model where a creditor, such as an IFI, that can commit to lend limited amounts at the risk-free rate and can refrain from lending into arrears is always repaid and adds value. The analysis suggests that IFIs and market lenders can both enhance welfare, even if banning commercial borrowing can sometimes be optimal. To maintain their status, preferred lenders should offer low cost financing in volumes that are consistent with countries' incentives to repay even in bad states. This suggests such lenders should not differentiate lending interest rates according to risk and should not participate in the restructuring of commercial debt. |
| Keywords: | sovereign debt;Preferred Creditor Treatment;Preferred Creditor Status;Sovereign Defaults;International Financially Institutions;Emergency Financing |
| JEL: | F34 O19 H63 P33 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:brikps:11101&r=fdg |
| By: | Rafaël Cos (UB - Université de Bordeaux); Sarah Kolopp (CESSP - Centre européen de sociologie et de science politique - UP1 - Université Paris 1 Panthéon-Sorbonne - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique); Ulrike Lepont (CEE - Centre d'études européennes et de politique comparée (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Caroline Vincensini (IDHES - Institutions et Dynamiques Historiques de l'Économie et de la Société - UP1 - Université Paris 1 Panthéon-Sorbonne - UP8 - Université Paris 8 Vincennes-Saint-Denis - UPN - Université Paris Nanterre - UEVE - Université d'Évry-Val-d'Essonne - CNRS - Centre National de la Recherche Scientifique - ENS Paris Saclay - Ecole Normale Supérieure Paris-Saclay) |
| Abstract: | More than ten years after the crisis of 2008, the role of finance questions: how is it now at the center of public policies when, only a short time ago, it was accused of being the cause of the most serious economic crisis since the 1929 crash? How did finance go from being a "problem" to be solved to being a solution to govern crises? How has the relationship between governments and finance shifted since 2008? And to what extent do they contribute to the recomposition of political and social orders? In this interview, we present three perspectives on this new age of financialization - from heterodox political economy (Daniela Gabor), to neo-institutionalist sociology (Wolfgang Streeck) and to critical sociology (Frédéric Lebaron). Daniela Gabor proposes the notion of "derisking state" to think about the new techniques by which the state has opened up new areas of the society to finance since 2008, transforming these areas into asset classes and reducing the risk for investors. Wolfgang Streeck insists on the transformations of the consolidation state, in which markets function as a tool for disciplining public spending, while their stability depends on state debt. Finally, Frédéric Lebaron shows that these new interdependencies between states and private investors cannot be understood without analyzing the specific dynamics through which central banks establish themselves within the fields of power. In doing so, we offer a range of tools to interpret the political and social transformations that are taking place today in the rearrangement between states, central banks and finance. |
| Abstract: | Un peu plus de dix ans après la crise de 2008, cette place de la finance interroge : comment cette dernière se retrouve-t-elle aujourd'hui au cœur des dispositifs d'action publique quand, il y a encore si peu de temps, elle était mise au banc des accusés pour avoir été à l'origine de la plus grave crise économique observée depuis le krach de 1929 ? Comment la finance est-elle passée du statut de « problème » à résoudre à celui de solution pour gouverner les crises ? Dès lors, comment les rapports entre les États et la finance se sont-ils déplacés depuis 2008 ? Et dans quelle mesure contribuent-ils à recomposer les ordres politiques et sociaux ? Dans cet entretien croisé, nous présentons trois éclairages sur ce nouvel âge de la financiarisation – celui de l'économie politique hétérodoxe (Daniela Gabor), celui de la sociologie néo-institutionnaliste (Wolfgang Streeck) et celui de la sociologie critique (Frédéric Lebaron). Daniela Gabor propose la notion de « derisking state » pour penser les techniques inédites par lesquelles l'État ouvre, depuis 2008, de nouveaux espaces de la vie sociale à la finance, en transformant ces espaces en classes d'actifs, et en réduisant le risque pour les investisseurs. Wolfgang Streeck insiste sur les transformations du consolidation state, dans lequel les marchés fonctionnent comme un outil de disciplinarisation de la dépense publique, tandis que leur stabilité dépend elle-même de la dette des États. Enfin, Frédéric Lebaron montre que ces nouvelles interdépendances entre États et investisseurs privés ne peuvent se comprendre sans analyser la dynamique singulière par laquelle les banques centrales s'affirment au sein des champs du pouvoir. Ce faisant, nous offrons une palette d'outils pour déchiffrer les transformations politiques et sociales qui se jouent aujourd'hui dans les réassemblages entre les États, les banques centrales et la finance. |
| Keywords: | Finance, Economic policies, 2008 crisis, derisking state, consolidation state, politiques économiques, crise de 2008 |
| Date: | 2022–01–17 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03829540&r=fdg |
| By: | Philippe Aghion (LSE - London School of Economics and Political Science, Chaire Economie des institutions, de l'innovation et de la croissance - CdF (institution) - Collège de France); Sergei Guriev (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Kangchul Jo (BOK ERI - Bank of Korea Economic Research Institute) |
| Abstract: | We study firm dynamics in Korea before and after the 1997/8 Asian crisis and pro-competitive reforms that reduced the dominance of chaebols. We find that in industries that were dominated by chaebols before the crisis, labour productivity and total factor productivity of non-chaebol firms increased markedly after the reforms (relative to other industries). Furthermore, entry of non-chaebol firms increased significantly in all industries after the reform. After the crisis, the non-chaebol firms also dramatically increased their patenting activity. Finally, markups of chaebol firms declined substantially, especially within industries dominated by chaebols before the crisis. These results suggest that the crisis had the virtue of helping Korea move from catching-up growth based on investment in existing technologies to innovation-based growth. |
| Date: | 2021–10–01 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:hal-03878612&r=fdg |
| By: | Adél Bosch; Matthew W. Clance; Steven F. Koch |
| Abstract: | According to recent macroeconomic evidence (Bosch and Koch 2020b; Farrell and Kemp 2020), the global ï¬ nancial crisis is still impacting the South African ï¬ nancial landscape more than 10 years later. In an effort to better understand the effect of the ï¬ nancial crisis, we examine household debt dynamics, with particular attention to deleveraging, following the ï¬ nancial […] |
| Keywords: | debt, Imputation, labour policy, labour utilisation, South Africa, unemployment |
| JEL: | D14 D15 J08 J20 J41 J58 J60 |
| Date: | 2021–07–01 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:868&r=fdg |
| By: | Lea Marchal (University of Paris 1 Pantheon-Sorbonne, France.); Claire Naiditch (University of Lille, France.); Betul Simsek (Institute of Law and Economics - Hamburg University, Germany.) |
| Abstract: | This is the first global study that quantifies the transmission channels through which foreign aid impacts migration to donor countries. We estimate a gravity model derived from a RUM model, using OECD data between 2011 and 2019 and an instrumentation strategy. Our identification takes advantage of data on multilateral aid provided by multilateral agencies which is non-donor specific. We find evidence that aid donated by a country increases migration to that country through an information channel. If that channel were the only one at play, a 1% increase in bilateral aid would induce a 0.17% increase in migration. In addition, a 1% increase in multilateral aid reduces migration from the less poor origin countries by 0.05% via a development channel. |
| Keywords: | Aid, Gravity, Migration |
| JEL: | F22 F35 O15 |
| Date: | 2022–11 |
| URL: | http://d.repec.org/n?u=RePEc:bai:egeiwp:egei_wp-2_2022&r=fdg |
| By: | Nitish R. Sinha; Michael Smolyansky |
| Abstract: | The “taper tantrum” of 2013 represents one of the largest monetary policy shocks since the 1980s. During this episode, long-term interest rates spiked 100 basis points—a move unintentionally induced by policymakers. However, this had no observable negative effect on the overall U.S. economy. Output, employment, and other important variables, all performed either in line with or better than consensus forecasts, often improving considerably relative to their earlier trends. We conclude that, from low levels, a 100 basis point increase in long-term interest rates is probably too small to affect overall economic activity and discuss the implications for monetary policy. |
| Keywords: | monetary policy; federal reserve; taper tantrum; quantitative easing |
| JEL: | E43 E44 E52 E58 |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2022&r=fdg |
| By: | Xavier Mateos-Planas (Queen Mary University of London; Centre for Macroeconomics (CFM)); Giulio Seccia (Nazarbayev University) |
| Abstract: | Recent micro evidence shows that default on trade credit repayments is substantial. What is the role of trade credit default in the transmission of macroeconomic shocks? We build a heterogeneous-firms quantitative model where an intermediate input is purchased by final-goods producers partly on trade credit before observing the realisation of their productivity. A bad productivity shock may ex-post induce final good producers to skip payment to suppliers or, alternatively, liquidate via bankruptcy. Aggregate trade credit delinquency and liquidation are taken into account by input suppliers; the individual liquidation risk is priced in by lenders supplying bank credit. The response of trade-credit delinquency and bankruptcy, via their effect on intermediate input supplier’s markups, provides an amplification mechanism of aggregate shocks. We consider productivity, financial and volatility shocks. In a calibrated version of the model, the surge in trade credit default that follows a negative shock accounts for a large portion of the fall in output and employment, and feeds into further firm liquidation and delinquency. For instance, trade-credit default accounts for about one third of the impact of a volatility shock. |
| Keywords: | trade credit, default, delinquency and bankruptcy, heterogeneous firms, amplification of macroeconomic shocks, markups |
| JEL: | D21 D25 E32 E44 G33 |
| Date: | 2021–11 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:2125&r=fdg |
| By: | Alex Clymo (University of Essex); Filip Rozsypal (Danmarks Nationalbank; Centre for Macroeconomics (CFM)) |
| Abstract: | Using administrative micro data we document how firms’ sensitivities to business cycles differ by size and age. Among the youngest firms, small firms are more cyclical than large, but the reverse is true among older firms. The differences in cyclicality are large: “young and small firms” are nearly twice as cyclical as large firms, who respond one-and-half to one to the aggregate business cycle. In contrast, “old and small” firms are almost acyclical on average. High leverage firms are more cyclical than low leverage firms which—when combined with the age-profiles and cyclicalities of financial variables—suggests that financial frictions are likely to explain the excess cyclicality of “young and small” firms, but not of large firms. Augmenting a dynamic heterogeneous-firm model with heterogeneous returns-to-scale and entrant wealth allows it to replicate these findings, and implies that financial policies targeted at young firms become less effective in stimulating aggregate output while the opposite is true for direct labor subsidies. |
| Keywords: | firm age, firm size, cyclicality, financial frictions |
| Date: | 2022–05 |
| URL: | http://d.repec.org/n?u=RePEc:cfm:wpaper:2207&r=fdg |
| By: | Clément Mazet-Sonilhac (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique) |
| Abstract: | This thesis consists of four chapters that study how imperfect information affects both credit and goods markets. The contribution of chapter 1 is to extend the study of search frictions to credit markets. Motivated by empirical evidence I document on local credit markets in France, I propose a theory of firm-bank matching subject to search frictions. I estimate structurally my model on French data using the staggered rollout of Broadband Internet, from 1997 to 2007, as a shock that reduced search frictions. I show that both the allocation of credit the cost of debt for small businesses were affected by this shock. In chapter 2, we document that banks specialize locally by industry to reduce asymmetric information, and that this specialization shapes the equilibrium amount of borrowing by small firms. For identification, we exploit the reallocation of local clients from closed down branches to nearby branches of the same bank. We show that branch reallocation leads, on average, to a decline in small firm borrowing that is twice larger for firms reallocated to branches less specialized in their industry than the original one. In chapter 3, we study the macro implications of credit relationship flows. We show that banks actively adjust their lending supply along both extensive and intensive margins and that gross flows associated with credit relationships (i) are volatile and pervasive throughout the cycle, and (ii) can account for up to 46% of the cyclical and 90% of the long-run variations in aggregate bank credit. We also highlight the role of the extensive margin in the transmission of monetary. Finally, we study in chapter 4 the role of Broadband Internet in reducing search frictions faced by French importers. We use the staggered rollout of broadband internet to estimate its causal effect on the importing behavior of affected firms. We find that broadband expansion increases firm-level imports by around 25%. We further find that the "sub-extensive" margin (number of products and sourcing countries per firm) is the main channel of adjustment |
| Abstract: | Les quatre chapitres de cette thèse étudient les effets des frictions informationnelles dans les marchés du crédit et des biens. Le chapitre 1 étend l'étude des « frictions de recherche » aux marchés du crédit. Motivé par des évidences empiriques que je documente sur les marchés locaux du crédit, je propose une théorie de l'appariement entreprise-banque soumis à des frictions de recherche. J'estime structurellement mon modèle et montre qu'une baisse des frictions de recherche affecte l'allocation du crédit et les taux des prêts octroyés. Dans le chapitre 2, nous étudions la spécialisation locale des banques par industrie. Nous montrons que cette spécialisation affecte le montant d'équilibre des crédits octroyés aux petites entreprises. Pour l'identification, nous exploitons la réallocation des clients d'agences bancaires fermées vers des agences voisines. Nous montrons que la réaffectation des agences bancaires entraîne, en moyenne, une baisse du crédit octroyé aux petites entreprises, l'effet étant doublé pour les entreprises réaffectées vers des agences moins spécialisées dans leur secteur que leur agence d'origine. Dans le chapitre 3, nous étudions l'effet des frictions informationnelles sur l'allocation du crédit aux entreprises. Nous proposons une nouvelle perspective macroéconomique sur le processus d'intermédiation du crédit. Nous montrons que les banques ajustent activement leur offre de crédit selon les marges extensives et intensives et nous soulignons l'importance des flux bruts associés aux relations de crédit. Finalement, nous étudions dans le chapitre 4 le rôle de l'Internet haut-débit dans la réduction des frictions de recherche auxquelles sont confrontés les importateurs français. Nous montrons que l'expansion du haut débit a provoqué l'augmentation des importations des entreprises d'environ 25% et nous constatons que la marge "sub-extensive" (nombre de produits et de pays d'approvisionnement par entreprise) est le principal canal d'ajustement. |
| Keywords: | Informational frictions, Corporate finance, International trade, Broadband internet, Frictions informationnelles, Finance d'entreprise, Commerce international, Internet haut-débit |
| Date: | 2021–06–25 |
| URL: | http://d.repec.org/n?u=RePEc:hal:spmain:tel-03439354&r=fdg |
| By: | Miglo, Anton |
| Abstract: | Crowdfunding is an innovative and fastly growing way of financing for entrepreneurial firms. England is the leading country in crowdfunding. Yet no research exists that compare different cities of UK with regard to the conditions of crowdfunding emergence. In this article we shed some light on this question. We have found that cities with better access to ultrafast broadband among households and cities with greater number of people with higher education have significantly better results in crowdfunding. Further we find that entrepreneurs in these cities select lower crowdfunding targets and are more likely to publish a spotlight about their ideas suggesting that entrepreneurs in these cities understand the importance of imperfect information and signalling (direct and indirect) in crowdfunding. We also discuss these findings in light of crowdfunding theories. |
| Keywords: | crowdfunding, reward-based crowdfunding, crowdfunding in technology sector, digital entrepreneurship, information asymmetry, signalling, factors of crowdfunding success, campaign target |
| JEL: | G32 L26 M21 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115833&r=fdg |
| By: | FATICA Serena (European Commission - JRC); OLIVIERO Tommaso; RANCAN Michela |
| Abstract: | We analyze a large sample of companies operating in the EU-27 in the period 2007-2018 to gain new insights on the determinants of corporate defaults. The sample includes micro, small, medium and large enterprises, both active and defaulting. We document significant differences in the drivers of insolvency across firm size categories. Micro and small firms are significantly more vulnerable to sectoral shocks and to disruptions along the supply chain than larger companies. Instead, the default probability for all firms is significantly larger when companies experience in the previous year negative end-of-the year equity, that is a measure of prolonged financial distress. By exploiting institutional differences in judicial efficiency among EU-27 countries, we find financial distress is more likely to predict default in jurisdictions with more efficient insolvency procedures. Finally, we derive potential implications of our findings, especially with regard to the recent crises hitting European firms and the harmonisation of national insolvency regimes in the EU-27 towards most efficient legal practices, as foreseen under the Capital Markets Union Action Plan. |
| Keywords: | bankruptcy, financial distress, SMEs, EU-27, judicial efficiency |
| Date: | 2022–12 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc131613&r=fdg |
| By: | Firano, Zakaria; Filali adib, Fatine |
| Abstract: | This paper attempts to answer the fundamental question of the choice of capital structure. The financial structure in Morocco raises several questions about the behaviour of firms, especially in relation to the banking system and the financial market. We tried to determine the factors that explain the choice of financial structure. In addition to the traditional known factors, we were able to introduce the effects of financial stability on the financial structure. The results obtained affirm that Moroccan companies are in a hierarchical conception of the choice of financing and they prefer the use of internal financing with a particularity where companies with long experience are less and less attracted by external financing. In addition, financial stability significantly affects the choice of financing method. Indeed, when the financial system is stable, companies prefer to use external financing, which results in over-indebtedness that negatively affects the stability of the Moroccan financial system in a second rank. We generalize this theoretical conception to assert that the degree of financial stability can have effects on the choice of the financial structure of companies. |
| Keywords: | financial structure; banking system; pecking order; financial stability |
| JEL: | G2 G3 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115790&r=fdg |
| By: | Haselmann, Rainer; Kick, Thomas; Singla, Shikhar; Vig, Vikrant |
| Abstract: | We employ a proprietary transaction-level dataset in Germany to examine how capital requirements affect the liquidity of corporate bonds. Using the 2011 European Banking Authority capital exercise that mandated certain banks to increase regulatory capital, we find that affected banks reduce their inventory holdings, pre-arrange more trades, and have smaller average trade size. While non-bank affiliated dealers increase their market-making activity, they are unable to bridge this gap - aggregate liquidity declines. Our results are stronger for banks with a higher capital shortfall, for noninvestment grade bonds, and for bonds where the affected banks were the dominant market-maker. |
| Keywords: | market-making, capital regulation, bond market liquidity |
| JEL: | G01 G21 G28 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:lawfin:44&r=fdg |
| By: | Ozili, Peterson K |
| Abstract: | This article presents a discussion of the role of central bank digital currency (CBDC), Fintech and cryptocurrency for financial inclusion and financial stability. We show that Fintech, CBDC and cryptocurrency can increase financial inclusion by providing an alternative channel through which unbanked adults can access formal financial services. CBDC and Fintech services have the potential to preserve financial stability while cryptocurrency presents financial stability risks that can be mitigated through effective regulation. The paper also identified some problems of CBDC, Fintech and cryptocurrency for financial inclusion and financial stability. The paper offered some insight about the future of financial inclusion and the future of financial stability. Although CBDC, Fintech or cryptocurrency can extend financial services to unbanked adults and offer cost-efficient advantages, there are risk considerations that need to be taken into account when using CBDC, Fintech and cryptocurrency to increase financial inclusion and to preserve financial stability. |
| Keywords: | CBDC, Fintech, cryptocurrency, financial inclusion, financial stability, blockchain, central bank digital currency. |
| JEL: | E40 E51 E58 E59 G21 O31 |
| Date: | 2023 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115768&r=fdg |
| By: | Ozili, Peterson K |
| Abstract: | This paper investigates the association between financial inclusion and sustainable development in a global context. The findings show that high levels of financial inclusion (in terms of higher commercial bank branches per 100, 000 adults) is significantly associated with high levels of sustainable development (in terms of higher electricity production from renewable sources, higher industry productivity, higher adult literacy rate and higher renewable electricity output). Also, higher financial inclusion is significantly associated with low combustible renewables and waste. There is uni-directional granger causality between global interest in sustainable development information and global interest in financial inclusion information particularly in the period after the global financial crisis (GFC) but before the COVID-19 pandemic. The results support global calls for greater financial inclusion and the attainment of the sustainable development goals for the good of all people, the environment and for the planet. |
| Keywords: | financial inclusion, sustainable development goals, access to finance, energy, renewables, adult literacy, industry, electricity, access to finance, unbanked adults, environment, research and development. |
| JEL: | G21 I31 Q56 |
| Date: | 2022 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:115772&r=fdg |
| By: | Elvis D. Achuo (University of Dschang, Cameroon); Pilag B.C. Kakeu (University of Bamenda, Cameroon); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | Despite the global resolves to curtail fossil fuel consumption in favour of clean energies, several countries continue to rely on carbon-intensive sources in meeting their energy demands. Financial constraints and limited knowledge with regard to green energy sources constitute major setbacks to the energy transition process. This study therefore examines the effects of financial development and human capital on energy consumption. The empirical analysis is based on the System Generalised Method of Moments (SGMM) for a panel of 134 countries from 1996-2019. The SGMM estimates conducted on the basis of three measures of energy consumption, notably fossil fuel, renewable energy as well as total energy consumption, provide divergent results. While financial development significantly reduces fossil fuel consumption, its effect is positive though non-significant with regard to renewable energy consumption. Conversely, financial development has a positive and significant effect on total energy consumption. Moreover, the results reveal that human capital development has an enhancing though non-significant effect on the energy transition process. Additionally, the results reveal that resource rents have an enhancing effect on the energy transition process. However, when natural resources rents are disaggregated into various components (oil, coal, mineral, natural gas, and forest rents), the effects on energy transition are divergent. Although our findings are consistent when the global panel is split into developed and developing economies, the results are divergent across geographical regions. Contingent on these findings, actionable policy implications are discussed. |
| Keywords: | Energy transition, Financial development, Fossil fuel, Human capital, Energy consumption, Eco-innovation |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/005&r=fdg |
| By: | Armand F. Akpa (Université d’Abomey-Calavi, Benin); Simplice A. Asongu (Yaoundé, Cameroon) |
| Abstract: | Financial inclusion is a necessary condition for the population to get access to credit. Despite the efforts made by governments and policy makers, the rate of financial inclusion in Sub-Saharan African (SSA) countries remains low. The internet can be one of the options to increase the rate of financial inclusion in SSA. But the use of internet in SSA remains low due to the poor quality of the internet and to its high cost. So, good governance quality can consolidate internet infrastructure in order to promote the internet. This paper analyses the role of governance quality in the relationship between internet and financial inclusion in Sub-Saharan African countries. The study utilises data from the International Monetary Fund (IMF) database for indicators of financial inclusion, World Development Indicators (WDI) for internet users and World Governance Indicators (WGI) for governance indicators over the period 2004 to 2020. Analysing the data using the System Generalized Method of Moments (SGMM), the results show that the internet can be effectively complemented with the quality of governance to improve financial inclusion.Thresholds of governance that are needed for the internet to promote financial inclusion are provided. The established thresholds are as follows: (i) 0.300 “voice and accountability†and “government effectiveness†, respectively; (ii) 0.250 “rule and law†; (iii) 2.500 “economic governance†and (iv) 1.000 “institutional governace†and “general governance†, respectively. Policies aimed at reinforcing the quality of governance in SSA countries could help consolidate internet infrastructure to promote internet usage and in turn improve financial inclusion. |
| Keywords: | Internet, financial inclusion, governance quality |
| JEL: | O30 G20 H11 |
| Date: | 2023–01 |
| URL: | http://d.repec.org/n?u=RePEc:exs:wpaper:23/004&r=fdg |