Financial market development,global financial crisis and economic growth: evidence from developing nations

Emerging and frontier markets in Africa have witnessed various economic and financial reforms aimed at integrating the domestic markets into the global financial market to attract investment. Whether these reforms promote high economic growth remains inconclusive. The paper applies the pooled mean group estimation technique to empirically re-investigate the link between financial market development, global financial crisis, and economic growth in selected African economies. The results strongly support our hypotheses that stock market and banking sector development promotes economic growth in the selected countries. Moreover, financial crisis reduce the positive effects of both the stock market and banking sector developments on economic growth. The study suggests that both the banking sector and stock market are important to deliver the long-run economic growth that the African region desired. Moreover, effort should be made to enact policy measures that would ensure development of the stock market which has received inadequate attention.     

Regional implications of financial market development: Industry location and income inequality

We develop a heterogeneous-firms model with trade in goods, labor mobility and credit constraints due to moral hazard. Mitigating financial frictions reduces the incentive of mobile workers to migrate to one region such that an unequal distribution of industrial activity becomes less likely. Hence, financial market development has opposite regional implications as trade liberalization. While the former leads to more dispersion of economic activity across space, the latter tends to drive clustering. This has immediate implications for income inequality both between regions and workers. According to our model, financial development reduces inequality in both dimensions.     

Finance–Growth Nexus and the P‐bias: Evidence from OECD Countries

Recent studies provide new empirical evidence confirming that financial development is linked to economic growth in OECD countries. Using new dynamic panel regression techniques, these appraisals indicate that within the group of high‐income countries stock market size as a measure of financial advancement contributes significantly to overall economic activity. Applying the same advanced techniques, this paper questions this conclusion by showing that the findings of these studies seem to be not only not robust with respect to adding new observations but also likely to be plagued by a severe price bias which belittles the information content of the used financial indicator (stock market capitalization). We provide evidence that anticipative price effects (i.e. expectations of future growth, reflected in current stock prices) may be driving the statistical relationship between stock market activities and economic growth in high‐income countries to a much larger extent than recent analyses of the finance– growth link in OECD countries suggest .     

Financial market development and trade openness: evidence from emerging economies

International trade is said to be the engine of economic growth. Despite an enormous effort to explain this phenomenon, the relationship between financial market development and trade openness and integration into the world economy is still an enigma. This article investigates the relationship between financial market development and trade openness. To do this, we develop a long-run and short-run model (a bounds testing approach to cointegration) for 18 emerging economies over the period 1980 to 2011. Estimates from all models show that financial market development, including both the stock market and the banking sector, has significant effect on trade openness in both short-run and long-run phenomena in the majority of countries. Despite many similarities among emerging economies, additional evidence suggests that the link between either stock market development or banking sector development with trade openness works via each country’s specific structure.     

Inter-linkages between competition and stabilisation policies in the banking sector and stock market development in Europe

The banking sector and the stock market in Europe have been adversely impacted by a series of global financial crises over the last two decades. Major financial reforms were implemented to enhance the stability and competition within the banking sector. Measures were also implemented to create a vibrant stock market in Europe to stimulate economic growth in Europe. This study examines the interactions between stock market development, banking competition, and banking stability in European countries from 1996 to 2016. The purpose of the study is to understand the inter-linkages between these variables to ascertain the spillover impact of policy reforms in the banking sector on the stock market and vice-versa. Using a vector error-correction model, the study finds long-run and short-run inter-linkages between banking competition, banking stability, and stock market development in European countries. The study’s most robust result is that banking competition and banking stability stimulate stock market development in the long run. There is also some evidence that healthy competition in the banking sector and stock market development instils greater stability in the banking sector. The results suggest that policy measures put in place to create a vibrant stock market must include elevating banking competition and banking stability, with policymakers being cognizant that causality may be bidirectional.     

我国收入不平等、金融发展和消费需求波动的实证研究:1978～2001

本文考察了收入不平等与总消费需求变动之间的联系,在高收入地区,不平等程度越大似乎消费需求波动越大,而在低收入地区,收入不平等越大,消费需求波动反而较小。本文找到证据表明金融发展水平能有助于解释为什么收入分配在高收入和低收入地区中影响消费需求的短期波动是不同的,本文的政策含义是,加快低收入地区如中西部的经济和金融发展步伐,加大金融发展相机调整的力度。     

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.     

Financial systems and economic growth in South Africa: a dynamic complementarity test

This study examines the relationship between banks, stock markets and economic growth in South Africa. The study attempts to answer one critical question: are stock markets and banks complementary to one another in the process of enhancing economic growth? The complementarity between the stock markets and banks is examined by including a set of interactive terms in a standard growth model, alongside bank development and stock market development proxies. In order to test the robustness of the results, three proxies of stock market development have been used, namely stock market capitalization, stock market traded value and stock market turnover – against the ratio of bank credit to the private sector, a proxy for bank-based financial development. The economic growth is, however, proxied by real GDP per capita. Using the ARDL-Bounds testing procedure, the study finds that the complementarity between stock market development and bank-based financial development is weak and sensitive to the proxy used to measure stock market development.     

我国区域金融发展差异的比较

通过运用金融相关比率、金融机构信贷比率、金融市场发展指标对我国东、中、西部的金融发展水平进行比较分析,得出以下结论东中西部的金融发展水平不仅表现出绝对差异,而且相对差异较大,中、西部地区落后于东部地区,且在信贷资金运用效率上中部劣势尤为突出。回归分析也证明了金融发展对我国区域经济增长有重要影响。因此,制定合理的金融政策有利于区域金融与经济协调发展。     

The effect of financial development on economic growth: evidence from the APEC countries, 1981–2000

Using the modified growth model, this study examines whether financial development would facilitate economic growth among the Asia-Pacific Economic Cooperation (APEC) countries from 1981 to 2000. It focuses on the effects of three aspects of financial development on growth: stock market, banking sector and capital flow. To control for the country-specific effect, the model is further estimated for the developed and developing member countries. Results suggest that among the three financial sectors, only the stock market development shows strong growth-enhancing effect, especially among the developed member countries. This positive relationship remains very robust even after controlling for the simultaneity bias. Thus, there is no evidence to suggest that the level of financial infrastructure development does affect the overall finance–growth relationship observed in this study.     

What matters in the finance–growth nexus of advanced economies? Evidence from OECD countries

Over the last decades, a large strand of finance and growth literature has provided ample evidence on the importance of financial deepening for economic development. Yet, recently, the focus of public debate has shifted towards the role of the financial system structure, an area in which empirical research remains relatively sparse and exploratory in nature. With this article, we aim to contribute to that debate by analysing the role the financial system structure plays in economic growth and risk. Focusing on stock markets and studying OECD economies over 1994–2013, we find that, ceteris paribus, financial systems with relatively larger stock markets facilitate economic growth and dampen economic risk. Our findings remain robust under application of instrumental variable and system generalized method of moments estimators, as well as when we use an alternative definition of stock market development, estimate median regressions, examine relatively high-frequency annual data, control for systemic banking crises or apply quadratic specifications. We find no such effect for private bond markets or private credit volume. Overall, our results suggest that financial system structure matters for the economic development of advanced economies and highlight the importance of a debate about the optimal structure of an economy’s financial system.     

FINANCIAL DEVELOPMENT ON GROWTH CONVERGENCE

This paper investigates whether the impacts of financial development on growth convergence vary with the stage of real development. We implement this analysis through the instrumental variable threshold regression approach proposed by Caner and Hansen. Our empirical evidence shows that financial intermediary development leads to long‐run convergence in growth of both economic activity and productivity. Moreover, such convergence‐enhancing effects of financial intermediation are stronger for less‐developed countries than for the more industrialized. In addition, the data reveal that stock market development assists growth convergence only in low‐income countries.     

Institutional Determinants of Financial Development in MENA countries

Developed and well regulated financial markets are usually seen as a precondition for an efficient allocation of resources and can foster long term economic growth. This paper explores the institutional determinants for financial development in the countries of the Middle East and North African (MENA) region. Institutional conditions are from the International Country Risk Guide. Panel‐econometric techniques are applied to assess the development in the banking sector and the stock market. As a main finding, institutional conditions are important in both financial segments, even after controlling for standard macroeconomic determinants and fixed effects. For the banking sector, corruption seems to be most decisive. For the stock market, the impact of corruption and law and order appear to be relevant. While per capita income and inflation do not seem to play a vital role, openness to foreign trade is quite important for all areas of financial development. Hence, overall, faster real economic integration is of key policy priority to improve financial development as a condition for higher GDP growth. Better law and enforcement practices and anti‐corruption policies are strategies to accompany this process.     

中国金融发展与经济增长的关系分析

古典经济学家大多认为金融发展能促进经济增长,以往国内外文献的研究中也不乏此类观点,但是随着近些年我国信贷市场、股票市场以及债券市场的不断扩张,金融市场也在快速繁荣的发展,其在整个经济体系中的影响也越来越重要,我们有必要在新的发展阶段重新验证其在经济增长中的作用。文章特选取1992—2009年间的数据进行实证研究,结果显示:经济增长是金融发展的格兰杰成因,但随着滞后期的延长,这种作用越发不明显,同时金融发展对经济增长的作用也是显著的。     

The causal relationship between financial development and economic growth in Africa

ABSTRACT

Previous empirical studies on the causal relationship between financial development and economic growth are not instructive given their failure to unearth the causality trend across the different time periods. Using a more recently developed and robust indicator of financial development, we revisit the causal relationship between financial development and economic growth within the framework of a frequency-domain spectral causality technique which allows the causality to vary across time. Using data from 47 African countries over the period 1980–2016, our findings largely suggest that, even though there is some evidence of demand-following, supply-leading and feedback hypotheses, for most part, we find strong support of neutrality hypothesis. Thus, financial development and economic growth at most frequency levels evolve independently. We infer that caution must be exercised in making general conclusions about the causal nexus between financial development and economic growth.     

International Financial Liberalization and Economic Growth

This paper pulls together existing theory and evidence to assess whether international financial liberalization, by improving the functioning of domestic financial markets and banks, accelerates economic growth. The analysis suggests that the answer is "yes." First, liberalizing restrictions on international portfolio flows tends to enhance stock market liquidity. n turn, enhanced stock market liquidity accelerates economic growth primarily by boosting productivity growth. Second, allowing greater foreign bank presence tends to enhance the efficiency of the domestic banking system. In turn, better-developed banks spur economic growth primarily by accelerating productivity growth. Thus, international financial integration can promote economic development by encouraging improvements in the domestic financial system.     

Economic development and financial depth in a model with costly financial intermediation

According to Gurley and Shaw, economic development typically is accompanied by a transition from self-financed to intermediated investment activity. In their account, economic growth stimulates financial market development, and financial market development is a strong contributing factor in enhancing real growth. We model the co-evolution of the real and financial sectors during the growth process. To do so, we embed a role for liquidity provision into a conventional neoclassical growth model. Following Baumol and Tobin, we also introduce a fixed cost associated with “trips to the bank”. We describe conditions under which the development of a financial system may or may not proceed smoothly. When it does not, development traps are observed. We also discuss policy interventions that may reduce the potential for development traps to arise.     

小议我国股市“财富效应”及其传导机制

本文阐明了财富效应对经济增长的作用机制，并针对财富效应传导机制，从股市规模、投资者结构及收益分配结构、股市持续变动趋势、“挤出效应”等方面分析我国股市财富效应尚很微弱的原因，由此对我国股市的健康发展给出了政策建议。     

湖南省金融发展与经济增长的ECM模型分析

金融发展与经济增长的关系是经济学的一个重要研究领域。选取1982—2008年为时间段,以湖南省为例对金融发展与经济增长的关系进行了实证研究,结果表明湖南省信贷存量、其他金融机构发展（除银行）与经济增长呈正相关关系,而货币存量与经济增长呈负相关关系。经济增长是其他金融机构发展的短期格兰杰原因,而存贷存量在长期上是经济增长的格兰杰原因。     

关于中国宏观经济变量与证券市场关联性的实证研究

检验股票市场与经济发展之间的关系是经济增长理论研究中的一个新课题,股票市场作为金融市场重要组成部分与经济增长、宏观经济变量之间的关系,更是当前研究的热点。文章将重点研究我国的宏观经济变量与股票市场之间是否存在关联性。文章选取了能够较为全面代表宏观经济运行情况的相关指标,并将这些宏观经济变量与代表中国股票市场运行的上证综合指数一起建立数据模型进行分析,探讨宏观经济变量与股票市场之间的相互关系,进而对中国股票市场的更好发展提出有效建议。