Multidimensional financial development,exporter behavior and export diversification

Financial development shapes export sector performance because exporters need external finance and face credit constraints. Previous empirical research has relied largely on single-country studies. The Exporter Dynamics Database (EDD), which features firm-level exports from over 60 countries, reveals differences in the microstructure of the export sector across countries. In this paper, we first provide new evidence that these differences are related to cross-country variation in financial development and structure. Second, we combine the EDD and multidimensional data on financial development with a global database on export diversification. This study is the first to examine how macrolevel export diversification is determined by the microcharacteristics of the export sector. This approach is novel in the empirical literature on export diversification. According to our cross-country analysis, access to domestic financial services positively contributes to export diversification by increasing the number of small exporters, as financial services ease the credit constraints these exporters face.     

Financial sector opening and financial constraints: an empirical study based on China’s experiences

ABSTRACT

The paper investigates the effect of financial sector opening on financial constraints based on the experiences in China. We firstly review the policy of China’s financial sector opening and set up exogenous policy measures. Then based on the panel data of listed firms from 2010 to 2015, we calculate four indices to measure China’s firm-level financial constraints through internal and external finance channels. We find that China’s financial sector opening alleviates financial constraints and upgrades the financing structure for China’s listed firms. Financial sector opening also eliminates ownership discrimination and promotes financing efficiency, to alleviate financial constraints of private enterprises and profitable enterprises. The mechanism of the effects of financial sector opening on financial constrain is mainly through the collateral channels and the elimination of information asymmetry.     

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 markets, the pattern of industrial specialization and comparative advantage: Evidence from OECD countries

Due to underlying technological and organizational differences, industries differ in their need for external finance. Since services provided by the financial sector are largely immobile across countries, the pattern of industrial specialization should be influenced by the level of financial development. Among OECD countries we find a strong causal effect of the financial sector on industrial specialization. Further, the financial sector is a source of comparative advantage in a way consistent with the Hecksher-Ohlin-Vanek model. Results are also presented on which aspects of financial systems are important for specialization and comparative advantage.     

Remittance and financial inclusion in refugee migrants: inverse probability of treatment weighting using the propensity score

ABSTRACT

This paper investigates the impact on remittances on financial inclusion of refugee migrants. While financial inclusion is gaining traction in the humanitarian and development literature, the linkage with the potential to improve the wellbeing of refugees, who are part of an upward spiral in numbers, has not been tackled. We examine World Bank survey data of 1041 Syrian refugees, using the inverse probability of treatment weighting propensity score analysis (IPTW). The method minimises the influence of outliers and addresses unobservable and missing data biases, which can plague survey based data. We observe that common indicators of financial inclusion when applied to refugees, given their limited access to formal financial services, may introduce a bias as the informal financial sector and excluded formal financial sector services do contribute to inclusiveness. We adopt a broader protocol for our data, measuring financial inclusion through six metrics stemming from G20 proposals. Overall, there is an opportunity to deepen financial inclusion for refugees who receive or send remittances. The possibility of expanding the financial inclusion options, and for this to percolate through to greater social inclusion, proffers practical commercial steps and policy enabling actions.     

Balance sheet changes and the impact of financial sector risk-taking on fiscal multipliers

We analyse implications of financial sector dynamics for fiscal expenditure multipliers in recessionary conditions. A new stock-flow consistent model is developed in which a financial sector with four financial instruments is integrated with the real sector. The transmission of policy innovations occurs through balance sheet effects. Higher government expenditure increases aggregate demand in the economy. This reduces the perceived probability of default on financial institutions’ loans, increases asset valuations, and leads financial institutions to reduce interest rate spreads. Expectations of higher future wealth and a reduction in credit constraints supports consumption growth. Stronger balance sheets across institutions and lower interest rates increase investment. The interaction between growth and balance sheet valuations creates financial accelerator effects though its impact on financial sector risk-taking. Inflows of foreign savings can increase the multiplier further than would be the case in a closed economy constrained by domestic savings. The results show that fully modelling interactions between real and financial sectors generates fiscal multipliers higher than have been found for South Africa in other types of model.     

Brexit,the City and the Contingent Power of Finance

Brexit poses a profound challenge to the economic fortunes of the financial services sector in the United Kingdom (UK) because it threatens to sever access to the single market in the European Union (EU). Recognising this, the City of London’s largest financial firms and main representative bodies supported a Remain vote in the June 2016 referendum, and subsequently lobbied for a ‘soft’ Brexit policy to preserve the City’s lucrative passporting rights. Despite this, the government led by Theresa May pursued a ‘hard’ Brexit policy which threatened to leave the UK outside the single market. How can we explain the City’s apparent failure to influence the UK’s Brexit policy? We argue that whilst the UK financial sector wielded formidable latent structural power, its capacity to translate this into instrumental influence in the policy process was constrained by three factors: the political statecraft of Brexit, leading the government to downgrade the concerns of the financial industry; the reconfiguration of institutional structures, which undermined the City’s voice within government; and constraints on business organisation, caused by collective action problems and heterogeneous preferences. These three factors constitute important scope conditions which highlight the contingent power of finance in liberal market economies.     

Imputation of Missing Values in the Fundamental Data: Using MICE Framework

Revolutionary developments in the field of big data analytics and machine learning algorithms have transformed the business strategies of industries such as banking, financial services, asset management, and e-commerce. The most common problems these firms face while utilizing data is the presence of missing values in the dataset. The objective of this study is to impute fundamental data that is missing in financial statements. The study uses ‘Multiple Imputation by Chained Equations’ (MICE) framework by utilizing the interdependency among the variables that wholly comply with accounting rules. The proposed framework has two stages. The initial imputation is based on predictive mean matching in the first stage and resolving financial constraints in the second stage. The MICE framework allows us to incorporate accounting constraints in the imputation process. The performance tests conducted on the imputed dataset indicate that the imputed values for the 177 line items are good and in line with the expectations of subject matter experts.

     

正规金融体系改革、内部资金乘数效应与中国企业总资产增长——以1994—2011年中国上市公司数据为例

本文使用1994—2011年中国非金融类上市公司数据,分析了中国正规金融体系改革对降低企业内部资金的乘数效应进而对企业总资产增长产生的影响。本文发现不同的改革阶段对企业增长的影响不同:在金融市场化改革初期1994—2000年,金融部门的规模、效率和相对结构变化均对企业资产增长产生正向作用;2001年之后银行的规模扩张和效率提升显著地促进了企业成长,而股市对企业资产增长的作用不明显,金融体系的结构变动对企业增长的影响不大。本文的研究表明中国金融体系的顶层设计直接影响着金融与实体经济之间的关系;在中国金融发展-经济增长模式中,金融体系的规模特别是银行部门的规模扩张起了主要作用;调整金融结构、提高直接融资比重有利于进一步发挥金融体系促进企业资产增长的功能。     

News-driven international credit cycles

How does news about future economic fundamentals affect within-country and cross-country credit allocation? How effective is unconventional policy when financial crises are driven by unfulfilled favorable news? I study these questions by employing a two-sector, two-country macroeconomic model with a banking sector in which financial crises are associated with occasionally binding leverage constraints. In response to positive news on the valuation of non-traded sector capital which turns out to be incorrect at a later date, the model captures the patterns of financial flows and current account dynamics in Spain between 2000–2010, including the changes in the sectoral allocation of bank credit and movements in cross-country borrowing during the boom and the bust. When there are unconventional policies by a common authority in response to unfulfilled favorable news, liquidity injections perform better in ameliorating the downturn than direct assets purchases from the non-traded sector.     

双重委托-代理视角下的金融中介、金融加速器与经济波动的研究

本文在BGG模型基础上,建立了包含企业、金融中介、投资者的双重委托一代理模型,将金融中介纳入信贷市场摩擦的分析框架内。分析了金融中介自身受信贷约束时,其资产净值变化对经济产生的金融加速器效应。得出在双重委托代理的信用契约下,企业外部融资溢价不但受自身资产净值的影响,还受金融中介资产净值的影响。各种外部冲击通过信贷市场中金融中介的传导对经济波动造成进一步放大的效应,经济波动的金融加速器效应在考虑金融中介资产净值的影响后得到了增强。     

Markup cyclicality and input factor adjustments

This paper investigates the existence of markups and their cyclical behaviour at the industry sector level. Markups are given as a price-cost relation that is estimated from a dynamic, structural model of the firm. The firms face costly adjustment of labour and potential financial constraints. The model is tested on a panel of firm- and plant-level data from Norwegian manufacturing industries. The results indicate a frequent presence of moderate pro-cyclical markups. Labour adjustment costs are present in four out of seven sectors but small in magnitude. The results are related to the role played by unions in a setting with high union density.     

Minsky’s financial fragility: an empirical analysis of electricity distribution firms in Brazil (2007–2015)

This article applies Hyman P. Minsky’s insights on financial fragility to analyze the behavior of electricity distribution firms in Brazil from 2007 to 2015. More specifically, it builds an analytical framework to classify these firms into Minskyan risk categories and assess how financial fragility evolved over time, in each firm and in the sector as a whole. This work adapts Minsky’s financial fragility indicators and taxonomy to the conditions of the electricity distribution sector and applies them to regulatory accounting data for more than 60 firms. This empirical application of Minsky’s theory for analyzing firms engaged in the provision of public goods and services is a novelty. The results show an increase in the financial fragility of those firms as well as of the sector throughout the period, especially between 2008 and 2013.     

The new financial framework for the Cuban non-state sector

A cornerstone of the current Cuban economic model reforms is its opening to the non-state small-scale sector. Using the results of a survey of non-state businesses, we look at the provision of financial services to the small- and medium-sized enterprises in the non-state sector from two perspectives: first, the nature of the new credit regulations and bank policies and how they accomplish the evaluation of credit to a hitherto non-existent sector; and second, how these small business clients view their relationship with their lender state banks. We look at Cuba from the perspective of a socialist economy in transition and compare it to microfinance in China and India.     

双重委托—代理视角下的金融中介、金融加速器与经济波动的研究

本文在BGG模型基础上,建立了包含企业、金融中介、投资者的双重委托—代理模型,将金融中介纳入信贷市场摩擦的分析框架内。分析了金融中介自身受信贷约束时,其资产净值变化对经济产生的金融加速器效应。得出在双重委托代理的信用契约下,企业外部融资溢价不但受自身资产净值的影响,还受金融中介资产净值的影响。各种外部冲击通过信贷市场中金融中介的传导对经济波动造成进一步放大的效应,经济波动的金融加速器效应在考虑金融中介资产净值的影响后得到了增强。     

How does global demand for financial services promote domestic growth in Luxembourg? A dynamic general equilibrium analysis

This paper studies the transmission of a change in the global demand for financial services on the domestic growth of an international financial center. To capture most of the possible interactions, we develop a dynamic general equilibrium model that we calibrate on Luxembourg data. Results show that the financial multiplier (ratio of a change in output to a change in the financial sector value added) is above 2 in the medium run and largely above 1 in the long run. The main transmission channels are net exports (expenditure approach) or capital income (income approach) in the medium run and investment in the long run. Moreover, the global demand for financial services has substantial implications for public finances. These findings also mean that a sudden loss of confidence towards a specific international financial center might have dramatic consequences for its whole economy.     

基于区域物流金融的第三方物流服务创新浅析

进入新世纪以来,中国区域物流金融服务在国内发展迅速,成为物流企业和金融行业共同关注的焦点领域。从区域物流金融业务的发展以及现状进行分析,以＂物流、信息流、资金流相结合＂为导向提出创新建议,以供借鉴。     

Firm growth and liquidity constraints: evidence from the manufacturing and service sectors in Italy

We use a large firm-level panel data set to analyse the relevance of liquidity constraints on firm growth in Italy. In most European countries, mainstream financial institutions are scantly able to provide affordable credit facilities to small firms. Thus, these firms are forced to finance their growth almost exclusively through retained earnings. We estimate a dynamic version of Gibrat-law, incorporating cash flow as a measure of financial constraints, for two different size classes within small and medium size enterprises and for several industries in manufacturing and service sectors. The findings show that, in general, small manufacturing firms have higher growth-cash flow sensitivities with respect to medium firms. Conversely, our results highlight, for the services, a significant heterogeneity in the impact of liquidity constraints on firm growth. In particular, the sensitivity of growth rates to the cash flow appears relatively high for small firms belonging to Knowledge Intensive Business Services. Validation of Gibrat-law in the services suggests that an important group of industries, with a superior capacity of encouraging firm’s competitiveness, need more financial resources to promote their growth and that of the manufacturing sectors with whom they are connected.     

Real estate price and heterogeneous investment behavior in China

We study the dynamic link between real estate prices and firms' investment behaviors in China using a new Keynesian dynamic stochastic general equilibrium model. The model features heterogeneous production sectors in which private firms face discriminatory borrowing constraints while state-owned firms are not. Fitted to China's quarterly data from 2005Q3 to 2014Q4, the quantitative general equilibrium model enables us to identify the driving forces behind and the macroeconomic variables interacting with land price. It confirms the existence of the “collateral channel” in the private sector without bearing the potential endogeneity problems in empirical studies. More importantly, we identify a “crowding out” channel between private and state-owned firms caused by discriminatory financial constraints. The “crowding out” channel implies a negative relationship between real estate prices and the investment of state-owned firms, which has been documented in empirical research but short of explanation so far.     

The dynamics of the growth of firms: evidence from the services sector

Using a dynamic panel data model with serial correlation in the error term, the purpose of this paper is to examine if Gibrat’s Law can be rejected for the services sector as it has been for manufacturing. The aim of this paper is also to improve the understanding of the empirical determinants of firm growth by extending the literature to include a new variable related to foreign participation. In addition, and based on recent developments in the growth of firms, our analysis also includes the role of the financial structure. The sample used is an unbalanced panel data set that includes all size classes, including the smallest surviving firms, from the Portuguese service sector over the period from 1995 to 2001. Applying the GMM-system estimator our findings suggest that Gibrat’s Law is rejected for the services firms. In addition, the results also indicate that firm growth is mainly explained by firm size and age. These results have significant policy implications.