Determinants of non-life insurance expenditure in developed and developing countries: an empirical investigation

The determinants of non-life insurance expenditure in a panel data set covering 36 developed countries and 31 developing countries for the period 2000–2011 are analysed. Results of our instrumental variable analysis indicate that economic freedom, income, bank development, urbanization, culture and law systems are the key drivers of the non-life insurance expenditure across countries. However, their impacts differ significantly between the groups of developed and developing countries, suggesting that the heterogeneity among countries in terms of the level of development plays an important role. The global financial crisis is also found to influence the direction of those effects, especially in developed countries. The article yields useful policy and economic implications for governments and multinational non-life insurance companies with regard to the development of the non-life insurance sector, an important engine for economic growth and prosperity.     

Do remittances promote financial development?

Workers' remittances to developing countries have become the second largest type of flows after foreign direct investment. This paper uses data on remittance flows to 109 developing countries during 1975-2007 to study the link between remittances and financial sector development. In particular, we examine the association between remittances and the aggregate level of deposits and credit intermediated by the local banking sector. This is an important question considering the extensive literature that has documented the growth-enhancing and poverty-reducing effects of financial development. We provide evidence of a positive, significant, and robust link between remittances and financial development in developing countries.     

‘A Hard Rain's a-Gonna Fall’: The Global Financial Crisis and Developing Countries

The global financial crisis of 2008–09 is the deepest downturn in the world economy since the Great Depression of 1929–33. Though its effects have been felt most noticeably in the developed countries, it has affected many developing countries. This article assesses what we know about the impact of the crisis on developing countries, and how the crisis may affect long-term development outcomes. It also examines the implications of the crisis for some key issues in development policy and thinking.     

金融危机背景下的欧盟对外发展援助

欧盟对外发展援助是欧盟及其成员国对发展中国家给予的财政、技术和人员等方面的援助。欧盟出于历史上的殖民联系、经济发展的需要和长远安全战略的考虑,在对外关系中,十分重视发展和加强同发展中国家的关系,1957年以来一直积极参与国际社会的对外发展援助活动。目前在金融危机的影响下,国际社会普遍缺少资金,欧盟对外发展援助资金在地域分布上开始由"全球性"转向"内向性";在部门分配的重点上还处于调整之中。欧盟等发达国家和集团要认识到金融危机让市场经济体制不完善的发展中国家受到了比发达国家更为严重的打击,因此应克服金融危机的干扰,切实履行援助承诺,继续向广大发展中国家提供和增加援助,从而降低发展中国家在危机中所遭受的伤害,以构筑一个较为理想与和谐的全球发展环境。     

Does Financial Development Promote Innovation in Developing Economies? An Empirical Analysis

Using firm‐level data from 2006 to 2013 for a set of developing countries, we examine the effects of financial development on innovation. Financial development boosts innovation by improving resource allocation and investment in strategic sectors as well as facilitating technology to promote growth. Using binary response models and instrumental variable techniques to correct for endogeneity, we find robust but puzzling results. Contrary to most of the existing literature, financial development has a negative effect on the probability of a firm to innovate in developing countries. This effect is conditional on firm size, and only larger firms benefit from financial development. These results are robust to different measures of financial development and econometric specifications. We argue that this is a result of the design of the financial system in regard to the lack of capital and institutional system. Consequently, developing countries should first generate appropriate institutional conditions if they want financial development to spur growth through innovation.     

Globalization and financial development

This paper argues that globalization is a key factor in stimulating institutional reforms in developing countries that promote financial development and economic growth. Advanced countries can help in this process by supporting the opening of their markets to goods and services from emerging-market countries. By encouraging these countries to increase their participation in global markets, advanced countries can create exactly the right incentives for developing countries to implement the reforms that will enable them to have high economic growth.     

Financial Development and Real Price Level Differences

Real price levels are systematically lower in developing countries than in developed countries. This paper provides time series evidence about the effect of financial development on real price level differences for 40 developing countries. Based on cointegration tests, a long-run equilibrium relationship is found between financial development and real price level differences in 21 countries. In seven countries, financial development "Granger-causes" real price level differentials, while for 19 countries the causality runs in the opposite direction. Country-specific institutional or political-economy differences, typically ignored in cross-section analysis, likely play an important role in real price level differences.     

Developing countries’ financial vulnerability to the eurozone crisis: an event study of equity and bond markets

The global crisis highlights the continued vulnerability of developing countries to shocks from advanced economies. Just a few years after the global crisis, the eurozone sovereign debt crisis has emerged as the single biggest threat to the global outlook. In this paper, we apply the event study methodology to gauge the scope for financial contagion from the EU to developing countries. More specifically, we estimate the responsiveness of equity and bond markets in developing countries to global crisis period and eurozone crisis news. Overall, we find that whereas global crisis period had a consistently negative effect on returns of equity and bond markets in developing countries, the effect of eurozone crisis news was more mixed and limited.     

Financial development, the structure of capital markets, and the global digital divide

This paper examines the extent to which financial development and financial structure may explain cross-country diffusion of information communication technology (ICT). Using panel data for 76 emerging and advanced countries for the period 1990–2003, it finds that credit and stock market development tends to foster ICT diffusion, but financial structure does not appear to have any significant relationship with it. The conclusions, which are consistent with what theory might predict, highlight the role of financial development in the market for knowledge-based products. The finding that financial development is an important determinant of ICT diffusion implies that countries with underdeveloped financial markets may sink even further to the information-poor and noncommunicating side of the global digital divide.     

发展中国家金融发展的制度分析

制度是经济增长的源泉之一,是金融发展的动力.当前,包括中国在内的众多发展中国家金融发展水平落后于发达国家的根源在于发展中国家的制度存在缺陷.本文分析了发展中国家金融发展中所存在的各种制度缺陷,指出发展中国家未来的金融改革方向是加强制度建设,提高制度质量.具体措施主要有:健全法治,保护产权,不断改革和完善政治及行政体制,大力发展教育,加强文化建设,不断积累社会资本等.     

International capital flows,liquidity risk,and monetary policy

In recent years, there has been a large amount of lending coming from the public sector of many developing countries. At the same time, the financial sectors in many advanced countries have issued a large share of portfolio debt to other countries. What are the implications of these events for the global financial system and overall economic activity? Do they have an impact on the transmission channels of monetary policy across countries at different stages of economic development? We investigate these important issues using a micro-founded model of money and banking so that the effects of monetary policy across countries can be meaningfully studied. Notably, the increase in capital outflows to the advanced economy renders monetary policy in developing countries to be less effective, while the effects of monetary policy in advanced economies are more pronounced. Yet, our results indicate that it can indeed be optimal for lower income countries to lend to the advanced world. Importantly, we find that the optimal amount of lending to advanced countries critically depends on the degree of liquidity risk — if it is sufficiently high, then public sector lending to advanced economies is not warranted. Consequently, our results indicate that governments in developing countries should carefully consider how much capital they send abroad to foreign countries.     

Asymmetric effects of financial development on South-South and South-North trade: Panel data evidence from emerging markets

Using bilateral trade data in total and technology-and-skill-intensive manufactured goods for 28 developing countries that account for 82% of all developing country manufactures exports between 1978 and 2005, this paper explores the effects of financial development on the pattern of specialization in South-South and South-North trade. The empirical results using dynamic panel regressions and comprehensive sensitivity tests suggest that financial development in the South has an economically and statistically significant positive effect on the share of total and technology-and-skill-intensive manufactures exports in GDP, and total exports in South-South trade. In contrast, no such significant or robust effect of financial development is found in South-North trade. Overall, the positive effect of financial development is found to be asymmetric favoring South-South significantly more than South-North trade. In addition, financial development is found to be increasing technology-and-skill-intensive manufactured goods exports significantly more than total manufactured or merchandise goods exports.     

Emerging market sovereign bond spreads,credit ratings and global financial crisis

This paper investigates the impacts of sovereign credit ratings and global financial conditions on the evolution of EMBI Global (EMBIG) spreads for a panel of 23 developing countries by using daily data for the period between 1998 and 2012. To this end, we employ not only the conventional panel estimation procedures, but also the recent methods tackling with either cross-sectional dependence stemming from common global shocks or a potential endogeneity. Our results suggest that credit ratings along with global financial conditions re the main determinants of EMBIG spreads. The determinants of EMBIG spreads are not invariant to speculative and investment grade episodes and transitions between them. The recent global crisis changed the determinants of EMBIG spreads and led to credit ratings' impact to converge between speculative and investment grade countries.     

Financial sector regulation,bank franchise values and savings mobilization

Empirical studies show that financial development exhibits a positive relationship with economic growth and the extent of poverty alleviation. Implementing policies that best promote financial development – such as mobilizing savings – are therefore, a matter of importance for all developing countries. A recent theoretical proposal that draws inspiration from the East Asian development experience hypothesises that by regulating to augment bank franchise values (i.e. the capitalized value of expected future profits accruing to banks), more savings can be mobilized compared with pursuing liberalization policies. This article provides an empirical test of this theory using a panel data set that covers 101 countries over the period 1994 to 2001. The results are not supportive of the theoretical proposal. In commenting on this result, it is noted that while intervening in the financial sector might not boost the aggregate quantity of savings mobilized, liberalization policies in developing countries should not necessarily be expedited, as other considerations are also clearly relevant.     

Does Financial Sector Development Augment Cross-Border Capital Flows?

ABSTRACT

The sharp increase in volatility of capital flows in recent years has resulted in many countries altering the regulations governing the flow of foreign capital only to find such changes having a limited impact. We postulate that one reason for the limited effectiveness of such changes in regulations is the level of financial sector development in the country. As a country enhances its level of financial sector development, it also develops more and more sophisticated financial instruments. The more advanced the domestic financial instruments are, and the deeper is the integration of the domestic financial markets with the world markets, the greater is the likelihood of developing strategies to bypass capital account management measures. In this paper, we use various empirical techniques to identify the impact of financial sector development on capital flows, after accounting for regulatory regime. The empirical results indicate that there is a threshold effect in the financial sector development capital flow relationship. In particular, financial sector development augments greater integration with global capital flows only above a threshold level. Below the threshold level we find financial development reduces the extent of integration with global capital markets.     

Taxation of International Private Capital Flows and Securities Transactions in Developing Countries: Do Public Finance Considerations Augment the Macroeconomic Dividends?

This paper examines policies to tax international private capital flows and securities transactions in developing countries. Many recent studies focus on the macroeconomic dividends associated with these policies (namely, their contribution to macroeconomic and financial stability and lengthened investor time horizons). In this paper I explore whether the potential of these policies to raise much‐needed tax revenues in developing countries augments their well‐known macroeconomic benefits. To my knowledge, there has been no effort to examine systematically the public finance issues related to the taxation of international private capital flows or securities transactions in the developing country context. I conclude that the public finance implications of these policies in middle‐income developing countries offers additional support to the macroeconomic case for them. To different degrees, taxation of international private capital flows and securities transactions has the potential to raise modest revenues in middle‐income countries. However, far more important is the potential of these policies to offer valuable macroeconomic dividends on the national level. These national macroeconomic dividends have the potential to bear fruit globally. This is because experiences with financial contagion over the last decade suggest that global financial stability can be enhanced via the promotion of domestic financial stability in developing countries.     

对新时期中国农村金融改革的思考——基于农村金融问题共性与个性的探讨

农村金融问题一直是发展中国家迫切希望解决的难题之一。本文通过分析发展中国家农村金融改革所面临的共性问题,即重工业化经济发展战略、农村金融问题的特殊性和小农信贷行为特征,同时结合中国渐进式改革的特点和农村金融改革从属于经济发展战略的特点,深入分析中国农村金融问题,并提出今后在进行农村金融改革时应注意的问题。     

Financial sector development and domestic savings in South Asia

Given the limited capital flows to developing countries in South Asia, domestic savings is the primary source of investment and growth. Financial sector development and access to financial institutions are important determinants of savings ratios in developing countries. In this context, we empirically examine the role of financial development on savings ratios of five South Asian countries after controlling for other relevant variables for the period 1975–2010 and also for two sub-periods—the pre-reforms period (1975–1991) and the post-reforms period (1992–2010). We find that financial sector development positively affects total and private savings in South Asia along with per capita income, share of agriculture and foreign savings. Results also support the humped-shaped relationship between financial development and savings. The causality results support that financial development leads to higher savings mobilisation in South Asia.     

全球金融危机对台湾决策思维的影响

2008年全球金融海啸使得发达国家面对自上世纪30年代以来最大的衰退，但是发展中国家如金砖四国却依然持续发展。许多经济学家严厉地警告，家计单位及企业的消费支出减少，而对产出的影响更为严重，此举迫使台湾不得不通过扩大消费的方式，来挽回疲弱的经济力。本文针对此次全球金融危机对于台湾当局在因应策略上，关于全球金融体制的崩溃分析、有关当局的处理布局、国际经济组织及先进国家处理经验及建立新的清算机制等因应之道做分析与探讨，提供政策建议，希望封尔後的金融布局有所帮助。     

地区金融发展与经济增长的典型相关分析

从金融发展理论产生的背景和所使用的分析工具上,寻找金融发展理论与实证研究产生分歧的原因。首先,从发达国家的利益出发,用根据发达国家的经济条件和经验得出来的西方主流经济理论来研究发展中国家的金融发展问题是其主要原因;其次,有关金融发展计量分析工具没有考虑金融风险因素。根据中国国情,从金融生态的角度,引入典型相关模型,探讨金融发展与经济增长的互动关系,建立了分析金融发展与经济增长互动关系的指标体系。