Asymmetric information, financial intermediation, and business cycles

Summary. This incorporates a debt contracting problem with asymmetric information into a standard monetary business cycle model. The model incorporates a limited participation assumption in order to induce a liquidity effect of monetary shocks and propagate monetary disturbances. The model economy shows that a positive money supply shock generates a decrease in nominal interest rates and an increase in output level. Asymmetric information amplifies the response of capital to the money supply shock, but does not propagate them in other ways. When the monetary shock is an innovation in reserve requirements, it induces a persistent response of the economy. Received: March 20, 1998; revised version: 1 April 1998     

Financial intermediation,inclusion, Fintech,and income inequality in Africa: Robust evidence from the supply and demand side data

The current literature on the finance-inequality nexus fall short of providing extensive evidence. This paper fills the gap by framing the financial sector; to the development of financial intermediation (supply side) and individual use of financial services (demand side). The first approach decouples the financial sector into the banking and stock market. We use the 5-year nonoverlapping averaged data from 1980 to 2017 across 49 countries and employ a panel data fixed effect and two-stage least squared estimation (2sls). We show that banking and stock market development widens income inequality. Besides, the effect is more prominent in countries that have a banking and stock market than countries only with the banking sector. The second approach uses financial inclusion and financial technology (Fintech) data from three waves of survey data in 2011, 2014 and 2017 on the individual use of financial services across 39 countries. We obtain three key findings. First, institutional quality significantly affects financial inclusion and Fintech. Second, Fintech positively affects inclusion and savings. Third, financial inclusion and Fintech exacerbate income inequality. Our result asserts a natural tendency that financial sector development exacerbate income inequality in Africa.     

Regional foreign banks and financial inclusion: Evidence from Africa

Regional foreign banks expanded quickly over the past decade in developing and emerging countries and have a growing influence in banking systems. We question whether the development of African regional foreign banks, also called Pan-African banks, influences financial inclusion of firms and households. To this end, we combine the World Bank Global Findex database and the World Bank Enterprise Surveys with a hand-collected database on the presence of regional foreign banks. We find that Pan-African banks presence increases firms’ access to credit and limited evidence that they favor financial access of the middle class by restoring confidence in banks. We suggest that this impact is related to the adoption of an aggressive strategy aiming at gaining market shares rather than through the exploitation of informational and technological advantages.     

R&D investment,cash holdings and the financial crisis: evidence from Korean corporate data

This article examines the real effects of the financial crisis in 2008 on corporate R&D investment by analyzing firm-level panel data from 2005 to 2011 obtained from KIS-VALUE, a Korean corporate finance database. I estimate a dynamic panel model of R&D investment that includes an after-crisis dummy to reflect the effects of the external finance supply shock after the financial crisis, an interaction term of the dummy and cash holdings to measure the marginal effect of cash holdings after the crisis, investment opportunities (sales and the q ratio) and financial positions as the debt-equity ratio. The estimation implies a negative yet relatively small impact of the credit supply shock from the financial crisis on R&D investment and the mitigation of the negative impacts by cash holdings after the onset of the financial crisis, whereas the data show decreasing R&D investment and sales for the whole period. Based on the data and the estimation, I find that firms were able to lessen the pressure from diminishing market demand before the crisis using external finance, but they had to use internal financial sources after the crisis smooth R&D investment.     

The loanable funds fallacy: exercises in the analysis of disequilibrium

This essay analyses the core proposition of loanable funds theorythat changes in technology and time preferences directly andimmediately affect interest rates. Applying what may be seenas a generalised financial-buffers approach to the analysisof disequilibrium, we find that loanable funds theory is flawedand should therefore be abandoned. A challenge to the neo-Walrasiangeneral equilibrium approach to monetary theory remains: thatof justifying the idea that—by some mechanism— intertemporalprices correctly reflect technology and time preferences.     

Determinants of women's financial inclusion: Evidence from India

A number of studies have analyzed the determinants of financial inclusion in India, but few if any have focused specifically on the factors that shape women's access to finance. This paper draws on the trove of women-specific data collected in the fourth round of the National Family Health Survey (NFHS-4), conducted in 2015–16 in India, to examine the factors that influence women's access to finance. The results indicate that while the forces that shape women's access to finance function at multiple levels, micro-level factors appear to be powerful drivers of inclusion. The analysis reveals that household-level economic indicators like wealth, gender of household head and their rural-urban location are crucial, but so are individual-level characteristics which explain approximately 83% of the variation in the multilevel regressions. Informal gender norms that govern women's mobility and economic activity crucially influence the ability of women to access loans and open bank accounts.     

法律制度与金融中介的发展:国际经验及借鉴意义

金融发展能够促进经济增长,其中金融中介发展是通过创造流动性、分散风险、收集信息和监控企业等途径来影响经济增长的;而金融中介本身的发展,则主要由一个国家的法律制度决定。通过法律制度与金融中介发展关系的理论和经验回顾,笔者认为,我国金融中介发展必须注意三方面的经验和教训。     

Analysing the effect of excess cash accumulation on financial decisions

In this current moment of crisis it is very important for firms to hold a suitable amount of cash. But it is also very important to analyse how this amount of cash affects firm value. Here an in-depth study is made of the determination of firm value centring our attention on the problem of excess cash accumulation. This article adds important value to the existing literature since, employing the panel data methodology in the sample of Spanish nonfinancial firms, it identifies whether excess cash holding affects firm value in general, and investment, financing and dividend decisions in particular. The results show how asymmetric information among the economic agents of the firm affects the cash reserves. In particular, shareholders could penalize the investment made by these firms and consider the positive effect that the debt in particular and the dividend policies exert on the firm. Moreover, the results reveal the importance of financial flexibility as opposed to the arguments provided by agency theory.     

The impact of financial regulation on current account balances

Both global imbalances and financial market deregulation feature prominently among the potential causes of the global financial crisis, but they have been largely discussed separately. In this paper, we take a different angle and investigate the relationship between financial market regulation and current account balances, an area for which limited empirical evidence exists. We use a panel of countries over the period 1980–2010 and employ a novel empirical approach which allows us to simultaneously account for model uncertainty, current account persistence and unobserved heterogeneity. We find robust evidence that financial market regulations affect current account balances and that different aspects of these regulations can have opposing effects on the current account. In particular we find that easing bank entry barriers is negatively associated with the current account balance. In contrast, bank privatization and securities market deregulation tend to raise current account balances. Our results also highlight the importance to control for persistence and unobserved heterogeneity. Once we control for these factors, we find robust evidence for a wide range of current account theories in contrast to previous studies accounting for model uncertainty.     

Theoretical motives of corporate cash holdings and political connections: firms level evidence from a developing economy

In this paper, we revisit the theoretical motives of corporate cash holdings while concentrating on the effect of political connections. In particular, we postulate two competing hypotheses for the effects that political connections can have on cash holdings: ‘substitution effect hypothesis’ and ‘complementary effect hypothesis’. Using the data on Pakistani firms over the period 2002–2010, we find that connected firms hold significantly larger cash reserves than their non-connected counterparts, thus confirming the ‘complementary hypothesis’, which suggests that agency problems lead connected firms to accumulate large amount of cash. Further, this effect is found to be more pronounced in dictatorial as opposed to democratic regimes indicating the presence of higher degrees of political patronage in that period. Finally, we also find differences in the complementary effect based on firm characteristics. Our results suggest that the firm size and leverage have increasing effects on the cash holdings of connected firms, contrary to the mainstream literature standpoint.     

The impact of financial factors on export decisions: The evidence from Turkey

The paper tests the validity of the financial constraint hypothesis in Turkey. In this context, we apply a panel logit model by using the dataset of firms whose stocks are traded in Istanbul Stock Exchange (ISE) for the period 2000–2011. As a result of analysis, we find that the financial constraint hypothesis is not valid in Turkey. The findings are crucial for firms in Turkey since the hypothesis has not been tested before for Turkey.     

Determinants of corporate cash holdings: evidence from the emerging market of Turkey

This study analyses the factors that might explain the level of corporate cash holdings in a broad sample of Turkish-listed nonfinancial firms over the period 1997 to 2011. The empirical results reveal that, on average, Turkish firms hold 9.1% of their total assets as cash and cash equivalents. There is a steadily increasing trend in cash holding across the years. Both the system GMM and the difference GMM regression results are consistent; almost exactly the same variables are significant and going in the same direction. The findings indicate that the previous year’s cash holding is positive and significant determinant at the current year’s cash level, suggesting that these firms have a targeted cash level. Furthermore, the results reveal that cash flow and growth opportunities have positive and significant impact on the cash level. However, the amount of capital expenditures, liquid assets used as cash substitute, the degree of tangibility of assets, financial debt ratio and leverage have negative and significant impact on the cash level. Most of these explanatory variables were in line with our theoretical background and with previous studies as well.     

The macroeconomic impact of financial and uncertainty shocks

The extraordinary events surrounding the Great Recession have cast a considerable doubt on the traditional sources of macroeconomic instability. In their place, economists have singled out financial and uncertainty shocks as potentially important drivers of economic fluctuations. Empirically distinguishing between these two types of shocks, however, is difficult because increases in economic uncertainty are strongly associated with a widening of credit spreads, an indication of a tightening in financial conditions. This paper uses the penalty function approach within the SVAR framework to examine the interaction between financial conditions and economic uncertainty and to trace out the impact of these two types of shocks on the economy. The results indicate that (1) financial shocks have a significant adverse effect on economic outcomes and that such shocks were an important source of cyclical fluctuations since the mid-1980s; (2) uncertainty shocks, especially those implied by uncertainty proxies that do not rely on financial asset prices, are also an important source of macroeconomic disturbances; and (3) uncertainty shocks have an especially negative economic impact in situations where they elicit a concomitant tightening of financial conditions. Evidence suggests that the Great Recession was likely an acute manifestation of the toxic interaction between uncertainty and financial shocks.     

The impact of software piracy on inclusive human development: evidence from Africa

The study examines the effect of software piracy on inclusive human development in 11 African countries for which software piracy data is available for the period 2000–2010. The empirical evidence is based on instrumental variable panel Fixed Effects (FE) and Tobit models in order to control for the unobserved heterogeneity and limited range in the dependent variable. The modeling exercise is based on the inequality adjusted human development (IHDI) and its constituents. The following main findings are established. First, from the FE regressions, software piracy consistently improves the IHDI and its constituents. Within this framework, the positive relationship between inclusive human development and software piracy is driven by all its constituents. Second, for Tobit regressions, the positive relationship between software piracy and inclusive human development is confirmed exclusively in IHDI and literacy specifications. Within the latter framework, the positive relationship between software piracy and inclusive human is driven fundamentally by the literacy rate. Policy implications are discussed.     

The impact of financial liberalization on bank efficiency: evidence from Latin America and Asia

This article investigates the impact of financial liberalization on bank efficiency, using data for a sample of over 4000 bank-year observations from ten emerging economies for the period 1991–2000. We use Data Envelopment Analysis (DEA) to calculate bank efficiency at the individual bank level. Bank efficiency measures are then aggregated at the country level to investigate the relationship between financial liberalization and bank efficiency, using a panel least square fixed-effects model. Overall, we find strong support for the positive impact of financial liberalization programmes on bank efficiency.     

The impact of formal and informal appropriability regimes on SME profitability in medium high-tech industries

Innovation is assuming increasing relevance in current economies, but being able to complete the innovation process is not enough for firms if they could not appropriate the value of their investments. Within this context, the aim of this paper is to understand whether SMEs may reap higher economic benefits while relying on formal regimes, in terms of patents, or informal ones in order to protect their innovations, which represents an under-investigated issue. On the basis of a panel regression and a cluster analysis on Italian SMEs, results suggest that firms relying more on informal mechanisms, in particular time-to-market and unique skills of employees, over patents, register superior performance.     

The impact of the informal economy on R&D,wage inequality and economic growth

We extend the existing research and development (R&D) growth literature by focusing on the short–medium–long run effects of the informal sector on R&D intensity, wage inequality and economic growth, and by considering 18 OECD countries between 1990 and 2008. We show that: the steady state is unique and stable; the share of informal economy (IE) in production affects negatively R&D intensity and wage equality; Nordic countries have the lowest share of IE in production, while Mediterranean countries have the highest share of IE, wage inequality and R&D intensity but R&D spillovers are lower.     

Risk preference interactions between individual farmers and small farmer groups: Experimental evidence from rural Ethiopia

The understanding of risk preference interactions among poor farmers in developing countries has important policy implications, as many programs that aim to alleviate poverty and address risk constraints are provided on a collective basis. We conduct a randomized field experiment in the drought-prone parts of Northern Ethiopia and elicit from poor, vulnerable farmers their hypothetical willingness to pay using individual and group lottery games. Analyzing the certainty equivalent ratios (CERs), we find that farmer groups are more risk averse than individual farmers. When the risk of the lottery is high, the group CER is primarily determined by the most-risk-averse farmer of the group, and to a lesser extent, by the least. The median farmer contributes to the group CER only when the lottery risk is moderate. After participating in the group elicitation, individual farmers also become as risk averse as the group on average. Specifically, the median and the least-risk-averse farmers become significantly more risk averse while the most-risk-averse farmer is unaffected. Our results show that policymakers should carefully consider how social interactions in rural communities affect individual and group risk preference and whether social interactions also affect the participation and effectiveness of development programs.     

Gender diversity,cash holdings and the role of the institutional environment: empirical evidence in Europe

While substantial evidence is emerging internationally on higher risk aversion among women than among men, there is less evidence on women’s business choices. We explore some of the reasons for the relationship between gender diversity and cash holdings. Specifically, this paper focuses on the choices involving the stock of cash held by firms in which women have executive roles and can consequently exert a crucial influence on the firms themselves. We estimate our proposed empirical models using a dataset of 12,466 observations from 18 European countries. We find a positive relationship between the presence of women with executive roles in the firm and cash holdings. Women tend to make more conservative choices probably because they are more risk averse than men are. This propensity has a relevant impact on the financial choices of firms when women play a leading role. Notably, the study demonstrates that the institutional environment and industry differences moderate our baseline relationship.     

人力资本及其结构视角下企业现金股利分配研究

人力资本作为企业获得竞争优势的重要因素之一,对企业的行为会产生显著影响。本文以2009-2020年中国A股上市企业为样本,探讨人力资本及高级人力资本结构对企业现金股利分配的影响。研究发现,人力资本投入及高级人力资本结构会显著减少企业现金股利分配。在经过一系列稳健性检验后,结论依然成立。进一步分析中发现,在人力资本较为密集的企业中,现金股利分配更少或企业更不倾向于分配现金股利;融资约束和《会计准则第9号—职工薪酬》的修订皆强化了人力资本及高级人力资本结构与现金股利分配间的负向关系。本文将劳动经济学理论同公司金融相结合,从人力资本的“正面”视角发现了中国企业“低股利”现象之谜。