scholarly journals The Impact of Financial Development on Investment: a Review of International Literature

2018 ◽  
Vol 9 (2) ◽  
pp. 167-192
Author(s):  
Brian Muyambiri ◽  
Nicholas M. Odhiambo
Keyword(s):  
Empirical Research ◽  
Financial Development ◽  
Empirical Literature ◽  
International Literature ◽  
Macroeconomic Variables ◽  
Development Indicators ◽  
Investment Determinants ◽  
Topical Analysis ◽  
The Impact ◽  
The Relationship

This article summarises the empirical literature on the impact of financial development on investment. It presents a topical analysis of empirical research that focuses mainly on the interaction between financial development and investment, determinants and measurement of both financial development and investment, and empirical findings on the relationship between the two variables under discussion. The study concludes that most of the research done on the relationship between financial development and investment is highly skewed towards assessing the relationship using mostly bank-based financial development indicators, as compared to the market-based financial development indicators. Given the number of studies assessed, the impact of financial development on investment appears to be inconclusive, at best. Moreover, the study shows that the relationship between these two macroeconomic variables seems to differ from country to country; it is dependent on the proxies used to measure the level of financial development, as well as the methodology employed.

scholarly journals The Impact of Financial Development on Investment: A Review of International Literature

2018 ◽  
Vol 9 (2) ◽  
pp. 167-192
Author(s):  
Brian Muyambiri ◽  
Nicholas M. Odhiambo
Keyword(s):  
Full Article ◽  
Empirical Research ◽  
Financial Development ◽  
Empirical Literature ◽  
International Literature ◽  
Macroeconomic Variables ◽  
Development Indicators ◽  
Investment Determinants ◽  
The Impact ◽  
The Relationship

[full article and abstract in English] This article summarises the empirical literature on the impact of financial development on investment. It presents a topical analysis of empirical research that focuses mainly on the interaction between financial development and investment, determinants and measurement of both financial development and investment, and empirical findings on the relationship between the two variables under discussion. The study concludes that most of the research done on the relationship between financial development and investment is highly skewed towards assessing the relationship using mostly bank-based financial development indicators, as compared to the market-based financial development indicators. Given the number of studies assessed, the impact of financial development on investment appears to be inconclusive, at best. Moreover, the study shows that the relationship between these two macroeconomic variables seems to differ from country to country; it is dependent on the proxies used to measure the level of financial development, as well as the methodology employed.

The Relationship Between Financial Development, Innovation and Economic Growth

2019 ◽  
pp. 462-479
Author(s):  
Asuman Koc Yurtkur
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
System Development ◽  
Financial System ◽  
Empirical Literature ◽  
Development Economic ◽  
Development Indicators ◽  
Theoretical Approaches ◽  
The Subject ◽  
The Relationship

Along with the globalization process, the relationship between the existence of an advanced financial system, financial development and economic growth has become one of the most debated issues. The financial system, development and development indicators, which play an important role in the overall success levels of the economy, are among the topics to be considered due to this importance. In this study, financial development, economic growth, and theoretical approaches are discussed. Moreover, the fact that the subject is empirically presenting evidence requires examination of this situation with studies in the literature. The presence of the findings obtained empirically, in particular Turkey's economy has made it necessary to include a large empirical literature. The generally accepted financial development indicators, which provide comparability in terms of countries, are examined in terms of financial markets and financial institutions in terms of depth, access, stability and efficiency during the period 2005-2015.

scholarly journals Financial development and income inequality

2020 ◽  
Vol 7 (54) ◽  
pp. 84-100
Author(s):  
Ewa Weychert
Keyword(s):  
Income Inequality ◽  
Income Distribution ◽  
Financial Development ◽  
Added Value ◽  
Empirical Literature ◽  
Financial Variables ◽  
Short Run ◽  
Fixed Panel ◽  
The Impact ◽  
The Relationship

AbstractThis paper analyses the influence of financial development on income inequality. Throughout this work, one may find the overview of theoretical and empirical literature as well as the empirical model using fixed panel data method. This research paper tries to disentangle the opposing views on the relationship between finance and income distribution, by evaluating the impact of the different dimensions of financial development on the level of income inequality. The important added value of this research is the usage of quintiles of income distribution as a dependent variable that may help to recognise the effect of financial development on the poorest and richest. Another novelty of the paper is the consideration of the effects of financial variables on Gini coefficient in the long and short run. The main results of the analysis using dataset from 2003 to 2014 indicate that financial access decreases income inequality.

The relationship between financial development indicators and human development in India

2014 ◽  
Vol 41 (12) ◽  
pp. 1194-1208 ◽  
Author(s):  
Madhu Sehrawat ◽  
A.K. Giri
Keyword(s):  
Human Development ◽  
Financial Development ◽  
Decomposition Analysis ◽  
Variance Decomposition ◽  
Annual Data ◽  
Content Type ◽  
Development Indicators ◽  
Long Run ◽  
The Impact ◽  
The Relationship

Purpose – The purpose of this paper is to examine the relationship between financial development indicators and human development in India using annual data from 1980-2012. Design/methodology/approach – The Ng-Perron unit root test is used to check for the order of integration of the variables. The long run relationship and short run dynamics are examined by implementing the ARDL bounds testing approach to co-integration. Granger’s non-causality test and variance decomposition techniques are also used to examine the impact of financial development indicators on human development. Findings – The results confirm a long run relationship among the variables. The results of granger non causality indicate that unidirectional causality runs from financial development indicators to human development index (HDI). The variance decomposition analysis shows that among all the financial indicators, broad money supply (M3) has the largest contribution to changes in human development in India. Research limitations/implications – The present study recommends for appropriate reforms in financial market to attain sustainable human development in India. The findings will be useful for India’s policy makers, in order to maintain the parallel expansion of financial development and human development. Originality/value – This paper is first of its kind to empirically examine the casual relationship between financial development indicators and human capital development proxied by HDI in India by using modern econometric techniques.

scholarly journals Impact of Government Debt on Economic Growth in Kenya: A Critical Literature Review

2018 ◽  
Vol 14 (1) ◽  
pp. 240
Author(s):  
Silveria Mukwandiga Murungi ◽  
Kennedy Okiro
Keyword(s):  
Economic Growth ◽  
Literature Review ◽  
Government Debt ◽  
Joint Effect ◽  
Empirical Literature ◽  
Macroeconomic Variables ◽  
The Impact ◽  
The Relationship ◽  
Critical Literature ◽  
Regulatory Reforms

The study examined the impact of government debt on economic growth through extensive review of relevant theoretical and empirical literature. Governments borrow to cover budget deficits. The debt is obtained either from the domestic market or from external sources. Government debt by Greece proved to be bad for the economy while government debt by USA which has the highest debt in the world proved to be manageable. This led to the need to examine the impact of government debt on economic growth in Kenya. The major theories examined included Adolph Wagner’s law of increasing state activity, the debt overhang theory, crowding out theory and the Ricardian equivalence theory. The main objective of the critical literature review was to review the literature done on the impact of government debt on economic growth while the specific objectives were to examine the impact of government debt on economic growth, to investigate the effects of macroeconomic variables on the relationship between government debt and economic growth, to establish the effects of regulatory reforms on the relationship between government debt and economic growth, and to review the joint effect of macroeconomic variables and regulatory reforms on government debt and economic growth. The majority of the findings from the literature reviewed on government debt indicated that there was an impact of government debt on economic growth; some showed a positive economic growth while others showed a negative economic growth.

scholarly journals The Causal Relationship between Financial Development and Investment: a Review of Related Empirical Literature

2018 ◽  
Vol 21 (2) ◽  
pp. 119-136 ◽  
Author(s):  
Brian Muyambiri ◽  
Nicholas M. Odhiambo
Keyword(s):  
Causal Relationship ◽  
Financial Development ◽  
Empirical Literature ◽  
Macroeconomic Variables ◽  
The Relationship

This article reviews the theoretical and empirical literature on the causal relationship between financial development and investment. Based on the literature considered, it can be concluded that there is little consensus to date on the direction of causality between financial development and investment. The study concludes that most of the research done on the causal relationship between financial development and investment is highly skewed towards assessing the causal relationship between the bank‑based side of financial development, as compared to the market‑based side of financial development. Given the number of studies assessed, the causal relationship between financial development and investment appears to be inconclusive, at best. Moreover, the study shows that the relationship between these two macroeconomic variables seems to differ from country to country; it is dependent on the proxies used to measure the level of financial development, as well as the methodology employed.

scholarly journals Assessing impact of base erosion and profit shifting on performance of subsidiaries of multinational corporations in Baltic countries

Equilibrium ◽  
2019 ◽  
Vol 14 (2) ◽  
pp. 277-293
Author(s):  
Egidijus Kundelis ◽  
Renata Legenzova
Keyword(s):  
Multinational Corporations ◽  
Empirical Research ◽  
Tax Avoidance ◽  
Empirical Literature ◽  
Company Performance ◽  
Tax Rates ◽  
Profit Shifting ◽  
Baltic Countries ◽  
The Baltic ◽  
The Impact

Research background: The problem of base erosion and profit shifting by multi-national corporations has been debated from different perspectives because of its multiple impact on the key actors in the economy. Studies refer to its positive impact on companies via corporate taxes saved, but its negative impact on governments via reduced tax collection. A number of empirical studies conducted in different countries support the substantial BEPS impact on company performance, but report differences in its magnitude. Other authors claim that, despite a wide range of tax avoidance opportunities available, tax avoidance is limited due to institutional measures imposed (tax audits, penalties for non-compliance) and high implementation costs. A majority of the previous empirical research covered large countries (USA, Germany) or regions (e.g. Europe), but there is a gap in the re-search assessing the BEPS impact on multinational corporations’ subsidiaries’ performance in countries with lower corporate income tax rates such as the Baltic countries. Purpose of the article: To assess the impact of base erosion and profit shifting on multinational corporations’ subsidiaries’ performance in the Baltic countries. Methods: Empirical research is conducted based on the framework employed by Hines and Rice (1994) to measure BEPS impact on company performance. Regression analysis with fixed effects was applied to a sample of 3,422 Latvian, Lithuanian and Estonian subsidiaries of multinational corporations, which are characterized by low corporate tax rates.  The data for the period of 2007–2015 was retrieved from the Amadeus database. Findings & Value added: The research revealed that Baltic countries’ tax differentials between multinational corporations’ parent and subsidiary countries might have a significant impact on the subsidiary’s financial performance. When the tax rate differences between Baltic and the foreign countries decrease by 1%, reported profits in Baltic countries increase by 2.3%, indicating profit-shifting behaviour. This is in line with the empirical literature and practices applied by multinational corporations. It is also in favour of anti-tax avoidance measures introduced by the EC to be adopted by Baltic and other EU countries.

scholarly journals Savings Mobilization and Financial Development during the Multicurrency Regime Period in Zimbabwe

2017 ◽  
Vol 9 (3(J)) ◽  
pp. 152-162
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Financial Development ◽  
Time Series Data ◽  
Empirical Literature ◽  
Series Data ◽  
Correction Model ◽  
Vector Error Correction ◽  
Vector Error ◽  
Long Run ◽  
The Subject ◽  
The Relationship

This paper seeks to investigate the relationship between savings and financial development in Zimbabwe using both autoregressive distributive lag (ARDL) and vector error correction model (VECM) approaches for comparison purposes with monthly time series data from January 2009 to August 2015. Four distinct hypotheses emerged from the literature and these are the savings-led financial development, financial development-led savings, feedback effect and the insignificant/no relationship hypothesis. The existence of diverging and contradicting views in empirical literature on the subject matter is evidence that the linkage between savings and financial development is still far from being concluded. Both F-Bounds and Johansen co-integration tests observed that there is a long run relationship between savings and financial development in Zimbabwe. What is even more unique about this study is that both ARDL and VECM noted the presence of a bi-directional causality relationship between savings and financial development in the short and long run in Zimbabwe. The implication of this study is that in order to increase economic growth, Zimbabwe authorities should increase savings mobilization efforts in order to boost financial development, which in turn attracts more savings inflow into the formal financial system.

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