scholarly journals CONVERGENCE OF FINANCIAL DEVELOPMENT IN ASEAN BASED ON PRIVATE CREDIT AND LIQUID LIABILITIES INDICATORS

BISMA ◽  
2021 ◽  
Vol 15 (1) ◽  
pp. 13
Author(s):  
Alvin Sugeng Prasetyo
Keyword(s):  
Financial Development ◽  
Financial Sector ◽  
Dynamic Panel ◽  
Asean Country ◽  
Private Credit ◽  
Sector Performance ◽  
Asean Countries ◽  
Development Gap ◽  
Beta Convergence ◽  
Generalized Moment

The financial development gap for ASEAN countries is critical to analyze since the widening financial development gap will lead to underdeveloped financial sector performance. The concept considered appropriate to measure the gap of financial development is the sigma, and beta convergence approaches. Therefore, this study aims to measure, test, and analyze the convergence of sigma and beta financial development in ASEAN. The method used was the Generalized Moment Method (GMM) dynamic panel with 2010-2017. Results of the study showed that there is a convergence of sigma and beta financial development in ASEAN countries. The limitation of this study is that it only uses two indicators of financial development. The governments of each ASEAN country can improve the financial sector by reforming the financial sector to mitigate, improve, and encourage the development of the financial sector. Keywords: ASEAN, convergence, financial development, GMM

Inflation and financial sector development in Sub-Saharan African countries

2019 ◽  
Vol 46 (4) ◽  
pp. 798-811 ◽  
Author(s):  
John Kagochi
Keyword(s):  
Financial Development ◽  
Good Governance ◽  
Trade Openness ◽  
Generalized Method Of Moments ◽  
Financial Sector ◽  
Content Type ◽  
Financial Sector Development ◽  
Sector Performance ◽  
Sub Saharan ◽  
Ssa Countries

Purpose The purpose of this paper is to examine the link between inflation and the financial sector performance in Sub-Saharan African (SSA) countries. Design/methodology/approach The study analyzes the relationship between inflation and the financial sector performance for selected 22 Sub-Saharan countries from 1980 to 2013. The study used panel data and the dynamic panel generalized method of moments econometric method. The study concentrates on the link between inflation and the development of the banking sector. Findings The findings suggest that inflation does not promote financial sector development in SSA region while trade openness has a positive impact on the selected financial development indicators. Other variables that enhance financial development in SSA include government expenditure and good governance. Practical implications The main policy implication of the study is that in order for SSA countries to benefit from a deeper and more active financial sectors, the rates of inflation must be maintained low and be consistently under control. Also, for SSA region financial sectors to become deeper and more active it is crucial to develop stronger economic institutions including independent central banks and sound fiscal authorities. Originality/value The study differs from previous studies as it includes more (22) countries from SSA region while previous studies were either regional or country specific. The study also incorporates trade openness and the role of institutional quality in enhancing financial development. This differentiates the study from previous studies on the subject from the region.

scholarly journals Does Financial Development Lead to Poverty Reduction in China? Time Series Evidence

2017 ◽  
Vol 9 (1) ◽  
pp. 99 ◽  
Author(s):  
Sin-Yu Ho ◽  
Bernard Njindan Iyke
Keyword(s):  
Time Series ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Consumption Expenditure ◽  
Causality Test ◽  
Reduction Strategies ◽  
Private Credit ◽  
Per Capita ◽  
The Impact

The impact of financial development on poverty reduction has received attention in the literature recently. While the connection between financial development and poverty may appear straight forward in theory, in empirics it may be much complicated. This study attempted at empirically assessing the causal links between financial development and poverty reduction in China for the period 1985–2014. The study used the Toda-Yamamoto causality test to avoid pretesting bias that has featured majority of the existing studies. The study utilized two standard proxies for financial development, namely: the domestic private credit by banks as percentage of GDP, and money supply (M2) as percentage of GDP; and a standard proxy for poverty reduction namely: the household final consumption expenditure per capita growth (annual percentage). The study found a bidirectional causal flow between financial development and poverty reduction, implying that the causal flow between these important variables is independent of the proxy for financial development. This means that financial sector reforms and poverty reduction programs are more of “win-win” strategies in the case of China. Therefore policymakers in China should continue to implement robust financial sector reforms and poverty reduction strategies.

scholarly journals Inflation and Financial Sector Performance: The Case of Nigeria

2014 ◽  
Vol 7 (1) ◽  
pp. 55-69 ◽  
Author(s):  
R. Santos Alimi
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Sector ◽  
Macroeconomic Performance ◽  
Financial Sector Development ◽  
Long Run ◽  
Negative Effect ◽  
Short Run ◽  
Sector Performance ◽  
Definition Of

Abstract The paper examines the long run and short run relationships between inflation and the financial sector development in Nigeria over the period between 1970 and 2012. Three variables, namely; broad definition of money as ratio of GDP, quasi money as share of GDP and credit to private sector as share of GDP, were used to proxy financial sector development. Our findings suggest that inflation presented deleterious effects on financial development over the study period. The main implication of the results is that poor macroeconomic performance has deleterious effects to financial development - a variable that is important for affecting economic growth and income inequality. Moreover, we observed a negative effect of the measures of financial development on growth, suggesting that impact of inflation on the economic growth passes through financial sector. Therefore, low and stable prices, is a necessary first step to achieving a deeper and more active financial sector that will enhance growth as predicted by Schumpeter.

scholarly journals Does Financial Development Lead to Poverty Reduction in China? Time Series Evidence

2017 ◽  
Vol 9 (1(J)) ◽  
pp. 99-112
Author(s):  
Sin-Yu Ho ◽  
Bernard Njindan Iyke
Keyword(s):  
Time Series ◽  
Financial Development ◽  
Poverty Reduction ◽  
Financial Sector ◽  
Consumption Expenditure ◽  
Causality Test ◽  
Reduction Strategies ◽  
Private Credit ◽  
Per Capita ◽  
The Impact

The impact of financial development on poverty reduction has received attention in the literature recently. While the connection between financial development and poverty may appear straight forward in theory, in empirics it may be much complicated. This study attempted at empirically assessing the causal links between financial development and poverty reduction in China for the period 1985–2014. The study used the Toda-Yamamoto causality test to avoid pretesting bias that has featured majority of the existing studies. The study utilized two standard proxies for financial development, namely: the domestic private credit by banks as percentage of GDP, and money supply (M2) as percentage of GDP; and a standard proxy for poverty reduction namely: the household final consumption expenditure per capita growth (annual percentage). The study found a bidirectional causal flow between financial development and poverty reduction, implying that the causal flow between these important variables is independent of the proxy for financial development. This means that financial sector reforms and poverty reduction programs are more of “win-win” strategies in the case of China. Therefore policymakers in China should continue to implement robust financial sector reforms and poverty reduction strategies.

scholarly journals Central Bank Independence and Inflation: The Matters of Financial Development and Institutional Quality

2020 ◽  
Vol 9 (1) ◽  
pp. 1-14
Author(s):  
Agung Kunaedi ◽  
Darwanto Darwanto
Keyword(s):  
Central Bank ◽  
Financial Development ◽  
Inverse Relationship ◽  
Institutional Quality ◽  
Financial Sector ◽  
Central Bank Independence ◽  
Institutional Diversity ◽  
Dynamic Panel ◽  
The Relationship

The inverse relationship between the independence of the central bank (CBI) and inflation became a consensus that trusted throughout the world. However, there is no conclusive explanation of why and how central bank independence has succeeded in suppressing inflation. The purpose of this study is to examine the influence of financial development and institutional quality on the relationship between central bank independence and inflation. Using 20 Countries of Asia with institutional diversity, this study analyzed through a dynamic panel approach (GMM-Arellano and Bond Estimator). The result indicates that the inverse relationship between central bank independence and inflation depends on the development of the financial sector and also the institutional quality of each country. In other words, to make the central bank's independence work effectively in order to solve bias inflation, the improvement of the financial sector and also the institutional quality is needed.JEL Classification : E580, E310, E020 How to Cite:Kunaedi, A., & Darwanto. (2020). Central Bank Independence and Inflation: The Matters of Financial Development and Institutional Quality. Signifikan: Jurnal Ilmu Ekonomi, Vol. 9(1), 1-14. doi: http://dx.doi.org/10.15408/sjie.v9i1.12899.

scholarly journals Complementarity Between Foreign Aid and Financial Development as a Driver of Economic Growth in Selected Emerging Markets

2018 ◽  
Vol 21 (4) ◽  
pp. 45-61
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Emerging Markets ◽  
Foreign Aid ◽  
Financial Development ◽  
Positive Impact ◽  
Financial Sector ◽  
Ordinary Least Squares ◽  
Private Debt ◽  
Domestic Credit ◽  
Private Credit

This paper studied whether the complementarity between financial development and foreign aid promotes economic growth in selected emerging markets using the panel Fully Modified Ordinary Least Squares (FMOLS) approach, with data ranging from 1994 to 2014. Although (1) aid‑growth and (2) finance‑growth studies have been conclusively dealt with, the role of financial development in the aid‑growth nexus has been hardly researched. Is financial development a channel through which foreign aid positively influences economic growth? The current study seeks to address these issues using selected emerging markets as a case study. The complementarity between foreign aid and financial development (domestic credit provided by the financial sector, domestic private credit provided by banks, outstanding domestic private debt securities and stock market turnover) resulted in a significant positive impact on economic growth. The study, therefore, urges selected emerging markets to implement policies which deepen the financial sector in order to allow foreign aid to positively contribute towards economic growth.

Is there a nonlinear relationship between financial development and poverty in Africa?

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Segun Thompson Bolarinwa ◽  
Abiodun Adewale Adegboye ◽  
Xuan Vinh Vo
Keyword(s):  
Financial Development ◽  
Poverty Reduction ◽  
Threshold Model ◽  
Principal Component ◽  
Financial Sector ◽  
Threshold Level ◽  
Present Level ◽  
Poverty Level ◽  
Dynamic Panel ◽  
Content Type

PurposeThe paper examines whether there is a threshold between financial development and poverty in African economies.Design/methodology/approachThe study adopts the innovative dynamic panel threshold model of Seo and Shin (2016) made practicable by Seo et al. (2019)–the model estimates threshold relationship even in the presence of endogeneity. Also, following the recommendations of Cihak et al. (2013) and Sahay et al. (2015), we also adopt a robust measure of financial development based on the four pillars of financial deepening, stability, efficiency and access derived from the principal component analysis (PCA).FindingsThe empirical results show that there exists a threshold level of financial development necessary for poverty reduction in Africa.Research limitations/implicationsOur result is important for policy formulations. First, individual African country must discover the level of financial development necessary for spurring poverty reduction. Second, policymakers, especially in lower-income countries, must keep improving their financial sector development to achieve the threshold level necessary for achieving poverty reduction even though financial development might seem less relevant at its present level.Practical implicationsThe policymakers in Africa should note that there exists a threshold level of financial development that reduces poverty. Hence, the present level of financial development might have not yielded a considerate effect on poverty. Still, the policymakers must keep pushing on until the threshold is achieved.Social implicationsFinancial development reduces poverty level but it must reach a certain threshold level before it does so. So, we advise African policymakers to continue to develop their financial sector to achieve this threshold.Originality/valueThis seems to be the first work to document the threshold relationship using the dynamic panel threshold. Besides, the study specifically concentrates on Africa dividing the continent into different income levels. Moreover, we adopt a robust measure of financial development unlike extant studies on Africa.

scholarly journals Islamic Banking and Financial Development

2016 ◽  
Vol 12 (2) ◽  
Author(s):  
Hind Lebdaoui ◽  
Joerg Wild
Keyword(s):  
Financial Development ◽  
Banking Sector ◽  
Generalized Method Of Moments ◽  
Financial Sector ◽  
Islamic Banking ◽  
Muslim Countries ◽  
Net Interest Margin ◽  
Heated Debate ◽  
Private Credit ◽  
The Subject

AbstractAbstract With the growing number of Islamic banks worldwide, much ink has been spilled on heated debate about its merits and ability to improve the financial sector. In order to buttress the subject matter of this debate, this paper investigate the link between Islamic banking assets share and the financial development. Using five different proxies of financial development from 22 countries for the period between 2000 and 2013, this research employs the generalized method of moments to cope with the endogeneity problem, and concludes that the share of Islamic banking is positively associated with the banking sector activity as measured by private credit. The competition of banking sector intensifies in countries with higher Islamic bank shares resulting in smaller net interest margin, whereas the structure of the financial sector does not change. A financial sector index composite regression showed that in general, financial development is positively linked to the Islamic banking presence. These findings provide empirical evidence that Islamic banking presence benefits financial development in Muslim countries.

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