Applying the breaks to non-performing loans in Ghana

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anthony Amoah ◽  
Rexford Kweku Asiama ◽  
Kofi Korle
Keyword(s):  
Financial Market ◽  
Good Governance ◽  
Negative Impact ◽  
Financial Sector ◽  
Ordinary Least Squares ◽  
Market Development ◽  
Empirical Literature ◽  
Content Type ◽  
Common Time ◽  
Financial Market Development

PurposeThis paper acknowledges the rising levels of non-performing loans (NPLs) and the consequences associated with such patterns to an emerging economy like Ghana. In theory, one would expect rising NPLs to have a negative impact on an economy, especially regarding credit creation and private sector growth. This research, consistent with empirical literature, constructs a measure of financial market development to investigate its effect on Ghana's NPLs.Design/methodology/approachThe fully modified ordinary least squares (FMOLS) econometric technique is used as a way of addressing common time series identification issues such as endogeneity and serial correlation.FindingsThe study finds that the growth of the financial market has a negative and statistically significant relationship with NPLs in Ghana. Therefore, building a stable financial sector is key to addressing Ghana’s rising rates of NPLs.Practical implicationsApplying the breaks to Ghana's NPLs would involve deepening credit and improving efficiency through good governance. The study suggests that such a mechanism would increase financial sector performance and reduce the growth risks arising from the industry.Originality/valueThe study analyzes the influence of financial market development on the quarterly growth of NPLs in Ghana. Most studies only focus on annual growth of NPLs.

scholarly journals Post-Keynesian Empirical Research and the Debate on Financial Market Development

2014 ◽  
pp. 1-13
Keyword(s):  
Economic Growth ◽  
Empirical Research ◽  
Financial Development ◽  
Financial Market ◽  
Financial Sector ◽  
Market Development ◽  
Real Sector ◽  
Economic Activities ◽  
Financial Market Development

Literature suggests that financial intermediation affects growth through various channels. The questions, however, are “Whether financial development affects real economic activities?” and “Does the structure of the financial system matter for the economic growth outcome?” The aim of this chapter is, therefore, to briefly describe the concept of financial market development by highlighting the important role of the financial sector in the development of the real sector. Later in the chapter, the scope of the book is discussed, and research objectives are identified.

Foreign direct investment and natural resources in Africa

2015 ◽  
Vol 42 (4) ◽  
pp. 608-621 ◽  
Author(s):  
Godfred Alufar Bokpin ◽  
Lord Mensah ◽  
Michael E. Asamoah
Keyword(s):  
Natural Resources ◽  
Financial Market ◽  
Direct Investment ◽  
Trade Openness ◽  
Market Development ◽  
Content Type ◽  
Infrastructural Development ◽  
Composite Form ◽  
Financial Market Development ◽  
Trade Blocks

Purpose – The purpose of this paper is to investigate the impact of natural resources on foreign direct investment (FDI) in Africa. Decomposing the measures of natural resource, in terms of contribution to GDP (oil rent (OR), mineral rent (MR) and forest rents (FRs)) and export drive (fuel exports (FE) and minerals export), with the objective of obtaining quantitative estimates of their relationship with FDI, we considered the effect of regional or trade blocks on the continent and control for trade openness, financial market development and infrastructure. Design/methodology/approach – Using annual panel data of 49 African countries over the period 1980-2011 and employing the system GMM estimation technique. Findings – The authors show that after allowing for effect of trade or regional block formation, natural resources in its composite form (ORs, MRs, forest rents (FRs), FEs and minerals export) influences FDI in Africa. Quantitatively, we demonstrate that though natural resources (compositely) influences FDI, the different measures of natural resource differ significantly in terms of their marginal contribution in attracting FDI to the continent especially to different trade blocks. The authors provide that in the presence of certain type of natural resources, trade openness or banking sector credit expansion or infrastructural development is less desirable whilst regional or trade blocks strongly moderate the effect of financial market development and infrastructural development on FDI flow on the continent. Originality/value – The authors employed a broad data set to provide evidence of the association between natural resources in its composite form and well as its various component and FDI to African after accounting for regional/trade blocks.

Financial Market Reform in Pakistan

1997 ◽  
Vol 36 (4II) ◽  
pp. 839-854 ◽  
Author(s):  
Mahmood Hasan Khan
Keyword(s):  
Financial Markets ◽  
Financial Market ◽  
Emerging Economies ◽  
Capital Accumulation ◽  
Financial Sector ◽  
Multiple Roles ◽  
Market Development ◽  
Stock Market Development ◽  
Financial Market Development

The paper argues that the finance dimension of economic development has often been treated as an aftellhought by researchers and politicians alike, because it is considered to be too "sophisticated" to matter for "simple" economies. The role of the financial sector was considered to be primarily for mobilising resources to increase growth. However, expclicnce has also revealed that financial development, including stock market development, is correlated with current and future economic growth, capital accumulation, and productivity improvements. It is suggested that a strategy for financial market development in emerging economies is better evolved from the perspective of the "functions" of financial markets as envisaged in modern financial literature. It is also argued that financial sector policies in emerging economies should focus on enhancing, rather than inhibiting, the multiple roles of financial markets.

The role of local financial market on economic growth

2016 ◽  
Vol 7 (2) ◽  
pp. 225-240 ◽  
Author(s):  
Rafiu Adewale Aregbeshola
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Financial Markets ◽  
Financial Market ◽  
Social Stress ◽  
Developing Economies ◽  
Market Development ◽  
Content Type ◽  
Financial Market Development

Purpose – Capital market development has been identified as one of the critical underpinnings of economic growth, in the developed but more essentially in the developing economies. Evidence abounds on the virtues of adequately spanned capital markets to provide requisite capital needed to fund investment activities as well as infrastructural developments. Although, foreign capital may be sourced to supplement inadequate local capital base, the associated costs (both logistics and supervisory) are generally daring to consider as convenient alternatives. Various studies have examined the role of local financial market development on economic growth, but none have strictly generated a combined focus on the three major African groupings – the Southern, the Western and the Northern African regions. In addition, there is no documented study that has compared the economic performance of each of these three major economic groupings in Africa. The purpose of this paper is to fill these voids. Design/methodology/approach – Various econometric techniques that include descriptive statistics, unit root tests, dynamic panel estimations and Granger causality tests. Findings – Using data generated from the African development indicators between 1980 and 2012 in contemporary econometric estimations, this study finds that local financial markets play crucial roles in economic development of each of these groupings, albeit in varying magnitude. The study also observes that local financial market plays very little role in the overall economic development of the three groupings when interacted. Research limitations/implications – A limited dataset, which reduces the time span as well as the number of countries covered in the study. A wider coverage may have altered the result generated, especially for the pooled estimation. Practical implications – That African countries should develop local financial markets in order to improve their level of economic growth. Social implications – Low rate of economic development has created a lot of social stress in Africa. Further, the fact that African leaders have largely not been able to grow their national economies in a meaningful and sustainable manner further unnerves skittish entrepreneurial underdevelopment on the continent, thereby exacerbates incidence and prevalence of poverty, and consequent social uprisings on a number of occasions. Originality/value – This study finds that financial market plays an important role on economic growth, whereas the effects are lower in the Southern African region. More specifically, the effects of financial market development on economic growth are stronger in North and West Africa than in Southern African regions. Given that Southern Africa financial market is more developed than the other two regions, this finding buttresses the fact that financial market development is significantly more important as a growth-driver in less developed financial markets than in developed ones.

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