scholarly journals Improving the Resilience of Banking System in Small Open Economy: Is Macroprudential Policy Efficient?

2021 ◽  
Vol 92 ◽  
pp. 07050
Author(s):  
Petra Popek Biskupec ◽  
Suzana Herman
Keyword(s):  
Granger Causality ◽  
Financial Stability ◽  
Granger Causality Test ◽  
Financial Sector ◽  
Bank Credit ◽  
Real Sector ◽  
Causality Test ◽  
The Real ◽  
Bounds Test ◽  
The Impact

Research background: Although macroprudential instruments increase financial stability, it is necessary to test how they affect the overall economic recovery after a global financial crisis. In the post-crisis period, the real sector needed a strong injection of capital in order to be able to start recovery and to encourage economic growth. At the same time, most of the countries introduced strict regulatory measures that strengthen bank capital and the liquidity base. From the standpoint of the financial sector stability, these measures contributed to the overall financial stability, but at the same time, these measures hold up the bank credit activity. Purpose of the article: This paper analyses the impact of macroprudential instruments on the bank credit activity toward the non-financial sector. The analysis is made by using the Granger Causality Test and the ARLDS Bounds Test. Methods: The research was conducted for the period of 2000 – 2019, based on the data of the Croatian National Bank and the Croatian Bureau of Statistics using logarithmic quarterly data. The analysis is made by using the Granger Causality Test and the ARLDS Bounds Test. Findings & Value added: The results confirm the thesis that additional macroprudential measures decrease the bank credit activity toward the real sector, which slows down the real sector recovery and extends the downturn in the business cycle. On the other hand, the macroprudential measures increase the financial stability of the whole economy, which is positive for future investments and recovery of the real sector.

Financial development, oil dependence and economic growth

2017 ◽  
Vol 34 (2) ◽  
pp. 281-298 ◽  
Author(s):  
Ramez Abubakr Badeeb ◽  
Hooi Hooi Lean
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Financial Sector ◽  
Causality Test ◽  
Content Type ◽  
The Government ◽  
The Impact ◽  
The Relationship

Purpose This paper aims to examine the validity of the question of whether oil dependence has a negative impact on the relationship between financial development and economic growth in Yemen. Design/methodology/approach The auto-regressive distributed lag approach for cointegration is used to examine the relationship between financial development and economic growth by capturing the impact of oil dependence on this relationship. The Granger causality test, based on a vector error correction model (VECM) framework, is used to investigate the causal relationships between financial development and economic growth. Findings The most interesting finding is the negative sign of interaction term between financial development and oil dependence, which implies that the positive effect of financial development on economic growth decreases with the increasing oil dependence. The result of the VECM Granger causality test revealed the existence of unidirectional causality running from financial development to economic growth. Research limitations/implications The short sample period and the worry of losing degrees of freedom limited us when including control variables in the model. If the data are available in the future, other control variables can be added. Practical implications The government should reduce the level of oil dependence in Yemen by diversifying the country’s economy. Accelerating the pace and efficiency of the financial sector will bear fruitful returns in this regard. The government could achieve this strategy by playing a more proactive role in encouraging the expansion of credit to enable the financial sector to provide a more efficient intermediary role in mobilizing domestic savings and channeling them to productive investments across various economic sectors. Originality/value This is the first study to examine the impact of oil dependence on the finance-growth nexus in Yemen. A new indicator for oil dependence is also proposed.

Reducing the Risks of the Financial Sector to Ensure Sustainable Growth of the Russian Еconomy

2019 ◽  
Vol 12 (3) ◽  
pp. 86-92
Author(s):  
T. I. Minina ◽  
V. V. Skalkin
Keyword(s):  
Economic Growth ◽  
Monetary Policy ◽  
Financial Sector ◽  
Developed Countries ◽  
Sustainable Growth ◽  
Necessary Condition ◽  
Real Sector ◽  
Financial Instruments ◽  
The Real ◽  
The Impact

Russia’s entry into the top five economies of the world depends, among other things, on the development of the financial sector, being a necessary condition for the economic growth of a developed macroeconomic and macro-financial system. The financial sector represents a system of relationships for the effective collection and distribution of economic resources, their deployment according to public demand, reducing the risk of overproduction and overheating of the economy.Therefore, the subject of the research is the financial sector of the Russian economy.The purpose of the research was to formulate an approach to alleviating the risks of increasing financial costs in the real sector of the economy by reducing the impact of endogenous risks expressed as financial asset “bubbles” using the experience of developed countries in the monetary policy.The paper analyzes a macroeconomic model applied to the financial sector. It is established that the economic growth is determined by the growth and, more important, the qualitative development of the financial sector, which leads to two phenomena: overproduction in the real sector and an increase in asset prices in the financial sector, with a debt load in both the real and financial sectors. This results in decreasing the interest rate of the mega-regulator to near-zero values. In this case, since the mechanisms of the conventional monetary policy do not work, the unconventional monetary policy is used when the mega-regulator buys out derivative financial instruments from systemically important institutions. As a conclusion, given deflationally low rates, it is proposed that the megaregulator should issue its own derivative financial instruments and place them in the financial market.

scholarly journals Financial system and growth and economic development

VUZF Review ◽  
2021 ◽  
Vol 6 (2) ◽  
pp. 160-170
Author(s):  
Małgorzata Hala
Keyword(s):  
Economic Growth ◽  
Economic System ◽  
Financial Institutions ◽  
Financial System ◽  
Financial Sector ◽  
Real Sector ◽  
The Real ◽  
State And Local ◽  
The Impact

The aim of the article is to present the role of the financial system in economic growth and development. The first part presents the traditional understanding of the relationship between the economic system and economic growth. The second part presents the experience of financial crises and their impact on the conversation on the mutual relations between the financial sector and the real sector. The third part shows the role of the state in the financial system. The article describes the arrangement of interrelated financial institutions, financial markets and elements of the financial system infrastructure.  It shows what part of the economic system the financial system is, and whether it enables the provision of services allowing the circulation of purchasing power throughout the economy. The article presents the important role of the financial system, the role related to the transfer of capital from entities with savings to entities that need capital for investments. It shows the financial system as a set of logically related organizational forms, legal acts, financial institutions and other elements enabling entities to establish financial relations in the real sector and the financial sector, and this system forms the basis of activity for entities using money, enabling the conclusion of various economic transactions, in which money performs various functions. The article also presents the concept of a financial crisis as a situation in which there are rapid changes in the financial market, usually associated with insufficient liquidity or insolvency of banks or financial institutions, and as a result, a decrease in production or its deepening. The article also includes issues related to the impact of public authorities (state and local authorities) on the financial system in the economy.

scholarly journals The impact of agriculture and renewable energy on climate change in Central and East European Countries

2020 ◽  
Vol 66 (No. 10) ◽  
pp. 447-457
Author(s):  
Nicoleta Mihaela Florea ◽  
Roxana Maria Badircea ◽  
Ramona Costina Pirvu ◽  
Alina Georgiana Manta ◽  
Marius Dalian Doran ◽  
...  
Keyword(s):  
Economic Growth ◽  
Renewable Energy ◽  
Greenhouse Gas Emissions ◽  
Greenhouse Gas ◽  
Granger Causality ◽  
Granger Causality Test ◽  
Causality Test ◽  
Gas Emissions ◽  
The Impact

According to the objectives of the European Union concerning the climate changes, Member States should take all the necessary measures in order to reduce the greenhouse gas emissions. The aim of this study is to identify the causality relations between greenhouse gases emissions, added value from agriculture, renewable energy consumption, and economic growth based on a panel consisting of 11 states from the Central and Eastern Europe (CEECs) in the period between 2000 and 2017. The Autoregressive Distributed Lag (ARDL) method was used to estimate the long-term relationships among the variables. Also a Granger causality test based on the ARDL – Error Correction Model (ECM) and a Pairwise Granger causality test were used to identify the causality relationship and to detect the direction of causality among the variables. The results obtained reveal, in the long term, two bidirectional relationships between agriculture and economic growth and two unidirectional relationships from agriculture to greenhouse gas emissions and renewable energy. In the short term, four unidirectional relationships were found from agriculture to all the variables in the model and one unidirectional relationship from renewable energy to greenhouse gas emissions.

scholarly journals Financial Sector Development and Economic Growth in Bangladesh: A Factor Analysis Based Causality Approach

2017 ◽  
Vol 9 (8) ◽  
pp. 229 ◽  
Author(s):  
Altaf Hossain ◽  
Suman Biswas ◽  
Md. Nasif Hossain ◽  
Arnab Kumar Poddar
Keyword(s):  
Economic Growth ◽  
Factor Analysis ◽  
Form Factor ◽  
Granger Causality ◽  
Granger Causality Test ◽  
Financial Sector ◽  
Causality Test ◽  
Financial Factors ◽  
Financial Factor ◽  
Private Credit

To understand the finance-growth nexus, this paper is intended to find a fewer number of important financial factors using Factor Analysis on some selected indicators of Bangladesh financial sector during the period 1988-2013. This paper then tries to check whether the identified financial factors cause economic growth or economic growth causes financial factors using the Granger – Causality test. Factor Analysis shows that financial indicators under the dimensions, depth and stability form Factor 1, and the indicators under the dimensions, use/access and efficiency form Factor 2. Being consistent with economic sense, Granger – Causality test shows that no financial factor significantly causes economic growth; rather economic growth causes “depth/stability” (‘private credit + capitalization’ /non-performing loan) factor of financial sector during the period. In summary, on average, financial sector of Bangladesh is being unstably (being increased non-performing loan) deepened with response to the demand of economic growth since 1988.

scholarly journals Influence of financial sustainability of households on default risks of regulated banks

2020 ◽  
Vol 159 ◽  
pp. 05015
Author(s):  
Zuhra Yergasheva ◽  
Saltanat Kondybayeva ◽  
Ryszhan Kabylkairatkyzy ◽  
Gulmira Yesengeldiyeva
Keyword(s):  
Financial Stability ◽  
Financial Sector ◽  
Financial Sustainability ◽  
The Real ◽  
Household Sector ◽  
Financial Condition ◽  
Credit Risks ◽  
Default Risks ◽  
The Republic ◽  
The Impact

The purpose of the article is to assess the financial sustainability of the household sector of the Republic of Kazakhstan and its impact on the real and financial sector in the context of minimizing the credit risks of the regulated banks of the Republic of Kazakhstan. The paper analyzes various points of view on assessing the financial sustainability of the household sector, makes a successful attempt to assess at a macroeconomic level the financial sustainability of households and the drawing potential of households in Kazakhstan using the OECD and IMF methods. The work made a holistic analysis of the financial condition and solvency of households in Kazakhstan, a forecasted VAR-model for assessing the impact of household financial sustainability on the state of the real sector of the economy has been developed; a regression model for assessing the impact of financial stability of households on the financial sector of Kazakhstan has been developed.

scholarly journals TRADE OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE FROM INDIA

2014 ◽  
Vol 16 (1) ◽  
pp. 188-205 ◽  
Author(s):  
Qazi Muhammad Adnan Hye ◽  
Wee-Yeap Lau
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Granger Causality ◽  
Trade Openness ◽  
Granger Causality Test ◽  
Causality Test ◽  
Long Run ◽  
Rolling Window ◽  
Short Run ◽  
The Impact

The main objective of this study is to develop first time trade openness index and use this index to examine the link between trade openness and economic growth in case of India. This study employs a new endogenous growth model for theoretical support, auto-regressive distributive lag model and rolling window regression method in order to determine long run and short run association between trade openness and economic growth. Further granger causality test is used to determine the long run and short run causal direction. The results reveal that human capital and physical capital are positively related to economic growth in the long run. On the other hand, trade openness index negatively impacts on economic growth in the long run. The new evidence is provided by the rolling window regression results i.e. the impact of trade openness index on economic growth is not stable throughout the sample. In the short run trade openness index is positively related to economic growth. The result of granger causality test confirms the validity of trade openness-led growth and human capital-led growth hypothesis in the short run and long run.

scholarly journals Determinants of Agricultural Production and Agricultural Sector Output in Nigeria

2020 ◽  
pp. 1-9
Author(s):  
Ewubare Dennis Brown ◽  
◽  
Asimiea Iyabode ◽  
Keyword(s):  
Exchange Rate ◽  
Granger Causality ◽  
Rural Areas ◽  
Agricultural Production ◽  
Agricultural Sector ◽  
Granger Causality Test ◽  
Causality Test ◽  
Agricultural Credit ◽  
Production Output ◽  
The Impact

The study examined the determinant of agricultural production and agricultural sector output in Nigeria. The objective of the study is to determine the impact of agricultural production determinants on agricultural output. The study was carried out based on secondary data collected through the CBN statistical bulletin unit root test was conducted test and granger causality test were used as the main statistical tests. The findings from the study based on the OLS results shows that agricultural funding, agricultural credit/loan as well as exchange rate have positive relationship with agricultural production output. Also, the granger causality test shows that agricultural funding, agricultural credit loan as well as exchange rate impact on agricultural production output. In view of the findings, it is recommended for adequate budgetary provisions for the agricultural sector in order to provide infrastructural facilities to the rural areas where farm produce are concentrated in order to boost production. Also, provision of credit facilities to the agricultural sector through the farmers in rural areas should be encouraged

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