scholarly journals The Impact of Financial Sector Development and Sophistication on Sustainable Economic Growth

2019 ◽  
Vol 11 (6) ◽  
pp. 1713 ◽  
Author(s):  
Cristian Paun ◽  
Radu Musetescu ◽  
Vladimir Topan ◽  
Dan Danuletiu
Keyword(s):  
Economic Growth ◽  
Economic Theory ◽  
Capital Accumulation ◽  
Value Added ◽  
Financial Sector ◽  
Sustainable Growth ◽  
Financial Sector Development ◽  
And Performance ◽  
Classical Economic ◽  
The Impact

The drivers of economic growth and development are among the most important issues explored by economic theory. Sustainability of economic development was previously linked by various economic schools of thought to natural resources (agriculture, land, minerals, metals etc.), labor force (including skills, productivity, and education), entrepreneurship or technology and innovation. Capital was later introduced by classical economic theory as the key element. Without significant capital accumulation, all other production factors remain idle. The value added of the production process is a result of the existence, the accessibility and the cost of capital. Therefore, the development and the sophistication of the financial sector has gradually become very important for any nation interested in sustainable growth. This paper investigates the impact of financial sector development, sophistication and performance on economic growth based on a panel regression methodology. We found statistically significant results that confirm the importance of this connection and that are very consistent with economic theory and previous relevant articles and studies.

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.

The Impact Of Financial Sector Development On Economic Growth In The Middle East And North Africa

2019 ◽  
pp. 81
Author(s):  
محمد سعيد محمود بللور ◽  
عامر عبدالفتاح زكريا باكير
Keyword(s):  
Economic Growth ◽  
Middle East ◽  
North Africa ◽  
Financial Sector ◽  
Financial Sector Development ◽  
The Impact

scholarly journals THE RELATIONSHIP BETWEEN THE DEVELOPMENT OF THE FINANCIAL SECTOR AND THE ECONOMIC GROWTH IN THE REPUBLIC OF NORTH MACEDONIA

2021 ◽  
Author(s):  
Dashmir Saiti ◽  
◽  
Borce Trenovski ◽  
Keyword(s):  
Economic Growth ◽  
Economic Theory ◽  
Money Supply ◽  
Positive Impact ◽  
Demand Curve ◽  
Time Lag ◽  
Trade Openness ◽  
Financial Sector ◽  
Short Run ◽  
The Impact

According to economic theory, the money supply positively affects economic growth, especially in the short run. Additionally, for small and open economies, the openness of the economy plays a crucial role in economic growth. Therefore, the subject of this paper is the impact of the money supply, measured through the broad money aggregate (M3), and trade openness of the country on the economic growth in North Macedonia. M3 aggregate is taken as an indicator of the financial sector development, whereas on the other hand, the trade-to-GDP ratio is an indicator for the openness of the economy. The research is employing the Vector Autoregression (VAR) model, and quarterly data for the period 1995-2019 are used. As opposed to the economic theory, the results show the absence of a long-run relationship between GDP, broad money, and trade openness in North Macedonia for the observed period. Also, in the short run, M3 and trade openness have a significant positive impact on GDP. Additionally, there is no noticeable time gap in the above relationships. Namely, the impact of broad money and trade openness on GDP in North Macedonia is not much stronger after a significant time lag from the impact in the first year. This put into question the capability of the monetary policy as a tool of the broader macroeconomic policy to shift the aggregate demand curve upwards and boost economic activity.

scholarly journals Financial Sector Development and Open Economy for Income Inequality Reduction: A Panel Fixed Model Analysis

2020 ◽  
Vol 12 (4) ◽  
pp. 33
Author(s):  
Ngwen Ngangué
Keyword(s):  
Latin America ◽  
Income Inequality ◽  
Open Economy ◽  
Trade Openness ◽  
Value Added ◽  
Financial Sector ◽  
Financial Sector Development ◽  
Fixed Model ◽  
The Government ◽  
The Impact

This study utilizes a panel fixed model to analyze the impact of financial sector development and commercial openness on income disparity of 40 developing countries over the period between 1995 and 2016. The empirical results suggest that there is a relationship between financial sector development, trade openness and income inequality. We establish that, in Latin America, the financial sector development increases income inequality while in Subsaharian Africa, we show the existence of an inverted U-shaped relationship between financial development and income inequality. Trade openness increases income inequality in the 40 selected countries. The increasing of 1 percent of trade openness leads the rise of 0,077 and 0,068 percent of income inequality in Latin America and Subsaharian Africa respectively. To alleviate income inequality, the government should (1) more develop financial sector and socially wide-ranging over period, important to welfares for both the rich and poor, and (2) diversify its commercial and industrial base beyond primary products in order to export high value-added products to generate more resources, better distribute them between rich and poor, and create more job opportunities.

The Role of Financial Sector Development in the Tourism- Growth Nexus: A Case of Southern African Countries

2018 ◽  
Vol 10 (3(J)) ◽  
pp. 100-110
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Random Effects ◽  
Financial Management ◽  
Fixed Effects ◽  
Panel Data Analysis ◽  
Financial Sector ◽  
Empirical Literature ◽  
Financial Sector Development ◽  
The Impact

The study explored the impact of financial development on the tourism -growth nexus in Southern African (SADC) countries using the three panel data analysis approaches (pooled OLS, fixed and random effects). Specifically, the study investigated whether financial development is a channel through tourism influences economic growth in SADC countries or if the complementarity between financial development and tourism has a significant positive impact on economic growth in the SADC region? Theoretical and empirical literature review shows that the positive separate impact of tourism and financial development on economic growth is no longer a disputed matter. What has so far not been conclusively studied is whether financial management is a channel through which tourism influences economic growth. It is against this backdrop that the author undertook the current study in order to make a contribution to literature. The study found out that tourism had a significant negative influence on economic growth whereas financial development positively and significantly affected economic growth in the SADC region. The complementarity between tourism and financial development had a positive (fixed effects) and significant positive influence (pooled OLS and random effects) on economic growth in SADC countries, in line with theoretical predictions. SADC countries are therefore urged to improve their financial sector development levels in order to enhance the impact of tourism on economic growth. 

Intellectual capital: a determinant of firms' operational efficiency

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Kanishka Gupta ◽  
T.V. Raman
Keyword(s):  
Intellectual Capital ◽  
Stochastic Frontier Analysis ◽  
Stock Exchange ◽  
Stochastic Frontier ◽  
Value Added ◽  
Financial Sector ◽  
Operational Efficiency ◽  
Content Type ◽  
Frontier Analysis ◽  
The Impact

PurposeIntellectual capital (IC) has been recognized in improving the efficiency of businesses and gaining competitive edge in the developed world. The present study offers perspectives into the effect of IC on the efficiency of the Indian financial sector companies.Design/methodology/approachFor the purpose of evaluating efficiency, the research has used stochastic frontier analysis (SFA). All Indian financial sector companies listed in National Stock Exchange (NSE-500) for the timeframe of ten years (2008–2018) have been considered. The paper has employed modified Pulic's Value Added Intellectual Coefficient (VAICTM) as a proxy to measure IC. Correlation and panel data regression have been used in order to examine the relationship.FindingsThe results of the study indicate positive and significant relationship between IC and efficiency of the firm. The results also show that all the components of IC, that is, human capital, relational capital, process capital and capital employed have a significant impact on firms' efficiency. Additionally, it has been seen that sample companies do not invest in research and development leading to no innovation capital.Practical implicationsThe research will assist managers in managing and controlling the IC, investors in matters related to investment and financial experts in improving the company's IC and value creation.Originality/valueThe current research is one of the pioneering studies in the context of Indian financial sector that examines the impact of modified VAIC on operational efficiency calculated using SFA.

Sign in / Sign up

Export Citation Format

Share Document