The Need for News Forms of Financial Intermediation

2020 ◽  
pp. 1978-1996
Author(s):  
Tristan Auvray ◽  
Thomas Dallery ◽  
Sandra Rigot
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Financial Intermediation ◽  
Financial System ◽  
Financial Sector ◽  
Policy Implications ◽  
Financial Intermediaries

This chapter deals with intermediaries in the financial sector such as banks and institutional investors. These actors are expected to play a central role in economic growth via the funding of investment because they are supposed to match creditors' desires (households) with borrowers' needs (firms) at a macroeconomic level. It aims to reassess the theoretical role of financial intermediation related to the allocation of savings in a context of a structural decline in overall investment for thirty years. To achieve this goal, it studies the evolution of financial intermediaries' behaviour in their capacity to finance investment and identifies the weaknesses of our current financial system which does not allocate optimally savings to firms' productive projects. Then it suggests some policy implications defining new forms of financial intermediation in which public financial intermediaries would have to play a greater role.

The Need for News Forms of Financial Intermediation

2017 ◽  
pp. 143-161
Author(s):  
Tristan Auvray ◽  
Thomas Dallery ◽  
Sandra Rigot
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Financial Intermediation ◽  
Financial System ◽  
Financial Sector ◽  
Policy Implications ◽  
Financial Intermediaries

This chapter deals with intermediaries in the financial sector such as banks and institutional investors. These actors are expected to play a central role in economic growth via the funding of investment because they are supposed to match creditors' desires (households) with borrowers' needs (firms) at a macroeconomic level. It aims to reassess the theoretical role of financial intermediation related to the allocation of savings in a context of a structural decline in overall investment for thirty years. To achieve this goal, it studies the evolution of financial intermediaries' behaviour in their capacity to finance investment and identifies the weaknesses of our current financial system which does not allocate optimally savings to firms' productive projects. Then it suggests some policy implications defining new forms of financial intermediation in which public financial intermediaries would have to play a greater role.

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.

Conclusion and Recommendations

2014 ◽  
pp. 226-238
Keyword(s):  
Economic Growth ◽  
Growth Process ◽  
Financial Sector ◽  
Policy Implications ◽  
Future Research ◽  
Financial Sector Development ◽  
Research Findings ◽  
Potential Channels

This book started with a brief review of different outlooks on the role of financial sector development in the process of economic growth. Then it highlighted the fact that recent studies, particularly those originating from modern growth theory, suggest that financial intermediation affects growth through various channels. To test this proposition, an empirical model was built, data were obtained, empirical tests were carried out, and results were discussed. The final chapter in this book, therefore, summarises key research findings and discusses the potential channels through which financial sector development affects the economic growth process. The chapter further highlights contributions of this research to growth studies, discusses policy implications arising from the findings of this research, and provides directions for future research and analysis.

scholarly journals FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN MALAYSIA: THE ROLE OF DOMESTIC FINANCIAL SECTOR

2005 ◽  
Vol 50 (02) ◽  
pp. 245-268 ◽  
Author(s):  
CHEE-KEONG CHOONG ◽  
ZULKORNAIN YUSOP ◽  
SIEW-CHOO SOO
Keyword(s):  
Economic Growth ◽  
Financial System ◽  
Recipient Country ◽  
Financial Sector ◽  
Technological Diffusion ◽  
Fdi Inflows ◽  
Long Run ◽  
Technology Level ◽  
Bound Test

This study aims to incorporate the role of domestic financial system in transferring the technological diffusion embodied in FDI inflows on the Malaysian economy from 1970–2001. Applying bound test, or unrestricted error correction model (UECM) proposed by Pesaran et al. (2001), the presence of FDI inflows creates a positive technological diffusion in both short- and long-run if the evolution of domestic financial system has achieved a certain minimum level. This implies that the improvement of technology level in Malaysia in the long run is due to the spillover efficiency effects from FDI. Hence, the study suggests that FDI tends to be more likely to enhance economic growth more efficiently when a recipient country has a well-developed and well-functioning financial sector.

scholarly journals The effectiveness of capital management strategies used by the investment funds in Poland

2014 ◽  
Vol 15 (2) ◽  
pp. 119-129
Author(s):  
Paweł Trippner
Keyword(s):  
Financial Market ◽  
Financial Intermediation ◽  
Management Strategies ◽  
Financial System ◽  
The State ◽  
Financial Intermediaries ◽  
Investment Strategies ◽  
Capital Management ◽  
Investment Funds ◽  
Location Policy

Abstract Collective investors play an extremely important role in the financial system of the state and in the economy. They operate in the financial market as institutions that enable households and businesses to convert savings into investments. Investment funds are the most conventional institutions which are dealing with financial intermediation. The main purpose of the submitted paper is to characterise the essence of investment funds operation in the role as financial intermediaries, to present the investment strategies and to characterise the methodology for measuring the effectiveness of capital management entrusted by the clients. The author has formulated a research hypothesis, according to which, the strategies of capital location policy used by the investment funds have an impact on the level of their performance, while funds holding higher risk portfolios perform better compared to the funds using passive investment strategies

scholarly journals Role of Financial Sector Development as a Contingent Factor in the Remittances and Growth Nexus: A Panel Study of Pacific Island Countries

2018 ◽  
Vol 3 (1) ◽  
pp. 51-74 ◽  
Author(s):  
Tiru K. Jayaraman ◽  
Lin Sea Lau ◽  
Cheong Fatt Ng
Keyword(s):  
Economic Growth ◽  
Technical Assistance ◽  
Panel Study ◽  
Financial Sector ◽  
Institution Building ◽  
Pacific Island ◽  
Domestic Investment ◽  
Financial Sector Development ◽  
Pacific Island Countries

Except for emergencies and for technical assistance for raising skills and institution building, foreign aid to Pacific island countries (PICs) for budgetary support has been phased out since the late 1990s. Because of the small sized domestic markets, foreign direct investment (FDI) is small and is confined to development of tourism infrastructure. On the other hand, inward remittances received from the rising number of islanders migrating overseas for work are increasing, far exceeding aid and FDI. However, influence of remittances on economic growth depends on financial sector development (FSD) for mobilizing the savings from the remittance receipts for domestic investment. This paper assesses the role of FSD in the nexus between remittances and economic growth through a panel study of five major PICs, namely Fiji, Samoa, Solomon Islands, Tonga and Vanuatu.  The study findings show that the ongoing efforts for strengthening FSD have to be stepped up by focusing on financial inclusion through spread of branchless banking and promotion of  information and communication technology.

Interactive effects of human capital in finance–economic growth nexus in Sub-Saharan Africa

2018 ◽  
Vol 45 (6) ◽  
pp. 1192-1210 ◽  
Author(s):  
Muazu Ibrahim
Keyword(s):  
Economic Growth ◽  
Human Capital ◽  
Interactive Effect ◽  
Financial Sector ◽  
Content Type ◽  
Long Run ◽  
The World ◽  
Sub Saharan ◽  
Ssa Countries

Purpose The purpose of this paper is to examine the interactive effect of human capital in financial development–economic growth nexus. Relative to the quantity-based measure of enrolment rates, the main aim was to determine how quality of human capital proxied by pupil–teacher ratio influences the relationship between domestic financial sector development and overall economic growth. Design/methodology/approach Data are obtained from the World Development Indicators of the World Bank for 29 sub-Saharan African (SSA) countries over the period 1980–2014. The analyses were conducted using the system generalised method of moments within the endogenous growth framework while controlling for country-specific and time effects. The author also follows Papke and Wooldridge procedure in examining the long-run estimates of the variables of interest. Findings The key finding is that, while both human capital and financial development unconditionally promotes growth in both the short and long run, results from the interactive terms suggest that, irrespective of the measure of finance, financial sector development largely spurs growth on the back of quality human capital. This finding is also confirmed by the marginal and net effects where the interactive effect of pupil–teacher ratio and indicators of finance are consistently huge relative to the enrolment. Statistically, the results are robust to model specification. Practical implications While it is laudable for SSA countries to increase access to education, it is equally more crucial to increase the supply of teachers at the same time improving on the limited teaching and learning materials. Indeed, there are efforts to develop rather low levels of the financial sector owing to its unconditional growth effects. Beyond the direct benefit of finance, however, higher growth effect of finance is conditioned on the quality level of human capital. The outcome of this study should therefore reignite the recognition of the complementarity role of human capital and finance in economic growth process. Originality/value The study makes significant contributions to existing finance–growth literature in so many ways: first, the auhor extend the literature by empirically examining how different measures of human capital shape the finance–economic growth nexus. Through this the author is able to bring a different perspective in the literature highlighting the role of countries’ human capital stock in mediating the impact of financial deepening on economic growth. Second, the author makes a more systematic attempt to evaluate the relative importance of finance and human capital in growth process while controlling for several ancillary variables.

Role of Institutional Investors in the Resource Provision of the Region’s Economic Growth

2018 ◽  
Vol 8 (8) ◽  
pp. 2439
Author(s):  
Tatyana Sergeevna KOLMYKOVA ◽  
Oleg Vladimirovich OSTIMUK ◽  
Anna Sergeyevna OBUKHOVA
Keyword(s):  
Economic Growth ◽  
Institutional Investors ◽  
Regional Economy ◽  
Geographic Region ◽  
Economic Modeling ◽  
Socioeconomic Conditions ◽  
Investment Environment ◽  
Current State ◽  
Kursk Region

The article examines the role of institutional investors in resource provision of the region's economic growth (on the materials of the Kursk region, Russia). The goal of the study is to analyze the current state and trends in the development of investment activities of institutional investors within the economic boundaries of a particular geographic region, the results of which allow to identify the main priority areas in the development of the investment environment for the activities of the regional economy entities under study. The scientific novelty of the study involves shaping the priority area sin the development of the region's economy based on the formation of an efficient investment environment and creation of favorable socioeconomic conditions for the activities of institutional investors. The completed study is based on the methods of economic and statistical analysis and economic modeling. The main result of the study is the development of priorities for the development of investment activities of institutional investors with the purpose of improving the resource provision of the region's economic growth.

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