scholarly journals Financial Development in Developing Countries and Its Impact on Economic Growth between 2008 and 2017

2021 ◽  
Vol 10 (4) ◽  
pp. 50
Author(s):  
Khuloud Mohammed Alawadhi ◽  
Nour Mansour Alshamali ◽  
Mansour Mohamed Alshamali
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Financial Development ◽  
Financial Institutions ◽  
Financial Stability ◽  
Global Economy ◽  
Fixed Effects ◽  
Fixed Effects Model ◽  
The World Bank ◽  
Financial Depth

This article examines how the level of financial development has changed in the ten years between 2008 and 2017 in connection to the most significant events in the global economy and finance and how financial development has influenced economic growth in developing countries. The study measures financial development following the World Bank (2020) approach and using indicators of financial access, financial depth, financial efficiency and financial stability, corresponding to financial institutions and financial markets. Based on a two-way fixed effects model, we find that financial development has positively and significantly contributed to economic growth in these countries during the ten years between 2008 and 2017, through increased access of individual consumers and firms to financial products and services. Other variables such as the depth, efficiency and stability of financial institutions and markets do not correlate significantly with the economic growth of developing countries between 2008 and 2017. This paper concludes that the access to financial institutions for individuals living in developing nations is favourably and significantly connected to economic growth in these countries.

The State of Finance in Fragile States

2021 ◽  
pp. 186-208
Author(s):  
Adolfo Barajas ◽  
Ralph Chami ◽  
Connel Fullenkamp
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Services ◽  
The State ◽  
Financial Inclusion ◽  
Significant Heterogeneity ◽  
Fragile States ◽  
The World Bank ◽  
Financial Depth ◽  
The World

This chapter describes the state of financial development in fragile states. Our analysis primarily relies on indicators from the World Bank Global Financial Development Database, which have been used extensively in the literature to capture the degree to which financial services and activities are present in an economy (depth) and the extent to which they are disseminated and made available to the population (inclusion). We find that financial depth in fragile states is underdeveloped and financial inclusion is low, but with significant heterogeneity among fragile states. We conduct empirical exercises which suggest that fragility is negatively related to financial development, both in terms of depth and especially in terms of inclusion, and exercises that also point to certain aspects of fragility most associated with financial underperformance. Finally, we use a benchmarking exercise to estimate how much financial underdevelopment in fragile states is costing them, in terms of economic growth.

scholarly journals Financial development and economic growth in the CEPGL region: evidence based on panel data

2021 ◽  
Vol 39 (2) ◽  
Author(s):  
Alexis Nyamugira Biringanine ◽  
Kazamwali Mzee
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Financial Development ◽  
Fixed Effects ◽  
Economic Status ◽  
Financial System ◽  
Fixed Effects Model ◽  
Correction Model ◽  
Bidirectional Relationship ◽  
The Relationship

This paper contributes to the huge debate on the relationship between financial development and the economic growth. The evidence is applied to the CEPGL (Communauté Economique des Pays des Grands Lacs) region. Previous studies have concluded either to the absence of connection between the two spheres, to a unidirectional or bidirectional relationship, or to a differentiated connection depending on the economic status of development of the country. The research design applied in this research has been inspired by the reality of the region by running an Error Correction Model for each country and a fixed effects model on panel data for the whole region. Therefore, we estimated econometric models from a series of macroeconomic data relating to the depth, and the accessibility of the financial system. The data used in this study range from 1976 to 2013. Insights from this study show that the financial system of the region is extremely underdeveloped, a weak connection between the financial and the economic sphere, in addition to an ambivalent sense of causality. 

scholarly journals Financial Development, FDI and Economic Growth——A Research Based on the Mediation Effect Model

2021 ◽  
Vol 251 ◽  
pp. 01087
Author(s):  
Li Miao
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Financial Development ◽  
Fixed Effects ◽  
Mediation Effect ◽  
Fixed Effects Model ◽  
Effect Model ◽  
Empirical Tests ◽  
National Perspective ◽  
The Individual

According to the mechanism of financial development, FDI and economic growth, this paper uses the individual fixed effects model and the mediation effect model of 31 provinces and cities in China from 2000 to 2019 to conduct empirical tests. The research results show that from a national perspective, the improvement of China’s financial development level can significantly promote economic development. Secondly, from the perspective of regional samples, the financial development of the eastern provinces has a more significant impact on the economy, while the financial development of the central and western provinces has a limited impact on the economic development. Thirdly, from the perspective of FDI intermediary, financial development can significantly promote the improvement of economic level through FDI.

scholarly journals Financial development and economic growth in the CEPGL region: evidence based on panel data

2020 ◽  
Vol 39 (1) ◽  
Author(s):  
Alexis Nyamugira Biringanine ◽  
Kazamwali Mzee
Keyword(s):  
Economic Growth ◽  
Panel Data ◽  
Financial Development ◽  
Fixed Effects ◽  
Economic Status ◽  
Financial System ◽  
Fixed Effects Model ◽  
Correction Model ◽  
Bidirectional Relationship ◽  
The Relationship

This paper contributes to the huge debate on the relationship between financial development and the economic growth. The evidence is applied to the CEPGL (Communauté Economique des Pays des Grands Lacs) region. Previous studies have concluded either to the absence of connection between the two spheres, to a unidirectional or bidirectional relationship, or to a differentiated connection depending on the economic status of development of the country. The research design applied in this research has been inspired by the reality of the region by running an Error Correction Model for each country and a fixed effects model on panel data for the whole region. Therefore, we estimated econometric models from a series of macroeconomic data relating to the depth, and the accessibility of the financial system. The data used in this study range from 1976 to 2013. Insights from this study show that the financial system of the region is extremely underdeveloped, a weak connection between the financial and the economic sphere, in addition to an ambivalent sense of causality. 

scholarly journals The Role of Remittances on Economic Growth: An Empirical Investigation Of 12 CEE Countries

2013 ◽  
Vol 12 (2) ◽  
pp. 193 ◽  
Author(s):  
Altin Gjini
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Fixed Effects ◽  
Capital Investment ◽  
Main Concern ◽  
Eastern European ◽  
Fixed Effects Model ◽  
Negative Effects ◽  
The Impact

This study investigates the role of remittances on economic growth in Central and Eastern European (CEE) countries. The main concern of CEE countries after the collapse of Communism has been to develop strategies for increasing their standard of living to the level of Western countries. Economic growth experienced after 1991 has been impressive for these countries. Factors that have influenced economic growth in developing countries vary from capital investment, to labor surplus, technological change, trade, foreign aid, foreign direct investment, research and development, and institutional factors. This papers main objective is to examine the impact of remittances on economic growth in 12 CEE developing countries[1] using balanced panel data covering the period from 1996?2010. We do this by using a fixed-effects model with heteroscedasticity corrected standard errors. We find that remittances have had negative effects on growth in this area for the period analyzed. Thus, an increase in remittances by 10% decreases the output by about 0.9%. [1] Albania, Bulgaria, Croatia, Czech Republic, Hungary, Latvia, Lithuania, Macedonia, Poland, Romania, Slovakia, and Slovenia.

scholarly journals Foreign direct investment, financial development and economic growth in Asian developing countries

2020 ◽  
Vol 2 (1) ◽  
Author(s):  
Nguyen Van Phuc ◽  
Nguyen Thuc Duy Anh
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Foreign Direct Investment ◽  
Panel Data ◽  
Regression Model ◽  
Financial Development ◽  
Direct Investment ◽  
Fixed Effects ◽  
Lm Test ◽  
Asian Developing Countries

This research investigates the role of domestic financial development in enhancing the positive effects of foreign direct investment (hereafter, FDI) on economic growth in Asian developing countries. In other words, we examine whether countries with a better domestic financial system can utilize FDI more efficiently. The empirical analysis uses balanced panel data of 24 Asian developing countries in the period 1995-2009. This research applies the various models and techniques in panel data regression. Linear static models for panel data, including constant coefficients model or pooled regression model (POOLED), fixed effects regression model (FEM) and random effects regression model (REM) are employed. We analyze all models and employ several kinds of test including poolability test, Hausman test, LM test, fixed effects tests and Wald tests to select the most appropriated estimated model. The research findings show that FDI alone does not have direct effect on economic growth but does have when combined with financial development. Well-developed domestic financial markets promote the process of technological diffusion associated with FDI in Asian developing countries. Therefore, FDI and domestic financial development are complementary in increasing the rate of economic growth in the region. There is a threshold level of domestic financial development above which FDI starts to have positive impacts on economic growth.

scholarly journals Islamic Bank Financing and Its Effects on Economic Growth: A Cross Province Analysis

2019 ◽  
Vol 8 (2) ◽  
Author(s):  
Muhammad Anif Afandi ◽  
Muhammad Amin
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Islamic Banking ◽  
Fixed Effects Model ◽  
Islamic Bank ◽  
Bank Financing ◽  
Panel Data Regression ◽  
Data Regression ◽  
Almost All

Islamic banking industry shows a reasonably good development, one of which is marked by an increase in service coverage in almost all provinces in Indonesia. However, the question is how far Islamic banking capable of contributing to the improvement of Indonesia's economic growth? The purpose of this research is to examine the role of Islamic banking in promoting inclusive economic growth with a sample of 33 provinces in Indonesia. The method used in this research is panel data regression using the fixed effects model. The results show that Islamic bank financing does not have an impact on Indonesia's economic growth. In other words, the results of the research provide information that the existence of Islamic banking in Indonesia has not yet give a significant impact on the welfare of Indonesian society

scholarly journals On The Relation Between Regulation And Economic Growth

2012 ◽  
Vol 11 (2) ◽  
pp. 147
Author(s):  
Atul A. Dar ◽  
Sal AmirKhalkhali
Keyword(s):  
Economic Growth ◽  
Fixed Effects ◽  
Developed Economies ◽  
Governance Indicators ◽  
Regulatory Quality ◽  
The World Bank ◽  
Quality Scale ◽  
Positive Growth ◽  
Accounting Model

This paper examines the relation between regulation and economic performance in the context of 23 developed economies. We apply a generalisation of the growth accounting model popularized by Solow to data over the 2002-2008 period. In the model, we assume that regulatory quality impacts on growth via its impact on total factor productivity growth. We look at three measures of regulatory quality, all of which are based on the set of governance indicators developed by the World Bank. The model is estimated using a fixed effects as well as a random effects estimation strategy. Our findings do lend support for the view that the better the quality of regulation, the higher rate of economic growth, but find no support for the view that the strength of the positive growth impact is stronger for countries that rank relatively lower on the regulatory quality scale.

scholarly journals The Nexus between Financial Development and Economic Growth: Panel Data Evidence from Developing Countries

2021 ◽  
Vol 14 (10) ◽  
pp. 489
Author(s):  
E. M. Ekanayake ◽  
Ranjini Thaver
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Least Squares ◽  
Financial Development ◽  
Panel Cointegration ◽  
Sub Saharan Africa ◽  
Explanatory Variables ◽  
Cointegration Tests ◽  
Sub Saharan

The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is investigated using four explanatory variables that are commonly used to measure the level of financial development and several other control variables, including a dummy variable representing the financial and banking crises. The sample of 138 developing countries is also classified into six geographic regions. We have carried out panel unit-root tests and panel cointegration tests before estimating the specified models using both Panel Least Squares (Panel LS) and Panel Fully Modified Least Squares (FMOLS) methods. In addition, panel Granger causality tests have been conducted to identify the direction of causality between FD and GROWTH for each of the regions. The results of the study provide evidence of a direct relationship between FD and GROWTH in developing countries. Furthermore, there is evidence of bi-directional causality running from FD to GROWTH and from GROWTH to FD in samples of Europe and Central Asia, South Asia, and all countries, but not in East Asia and Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa.

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