scholarly journals Financial Deepening and Economic Development in MENA Countries: Empirical Evidence from the Advanced Panel Method

2017 ◽  
Vol 9 (4) ◽  
pp. 152
Author(s):  
Serife Ozsahin ◽  
Dogan Uysal
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Private Sector ◽  
Financial System ◽  
Estimation Methods ◽  
Financial Deepening ◽  
Mena Countries ◽  
Integration Test ◽  
Domestic Credit

This study analyses the effect of financial deepening on economic development in 12 MENA countries for the period between 2000 and 2014. Using three financial deepening indicators which are widely used in the literature, an econometric analysis was conducted through co-integration and estimation methods which take cross-sectional dependence into account. A long-term relationship between variables was revealed with Westerlund (2008) Durbin-Hausman panel co-integration test, and then, long-term coefficients were obtained using Pesaran (2006) CCE (Common Correlated Errors) estimator. Empirical findings point to a positive relationship between financial deepening indicators - domestic credit to private sector, domestic credit provided by private sector, and liquid liabilities of the financial system ratio – and economic development. With this study, it was shown that the domestic credit to private sector causes economic growth for five countries, domestic credit provided by financial sector causes economic growth for one country, and liquid liabilities of the financial system causes economic growth for four countries.

scholarly journals Financial depth in the context of the relationship with economic growth

2021 ◽  
Vol 2021 (6) ◽  
pp. 72-88
Author(s):  
Yuliia SHAPOVAL ◽  
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Financial Resources ◽  
Financial Deepening ◽  
Credit Expansion ◽  
Financial Depth ◽  
Domestic Credit ◽  
Account Due ◽  
Investment Growth ◽  
The Relationship

The generalization of quantitative and qualitative scientific approaches to the essence of financial depth enables to define it as a resulting characteristic that demonstrates the saturation of the economy with financial resources, that allows assessing the ability of the financial system to effectively mobilize and redistribute financial resources to achieve sustainable economic development. The retrospective analysis of empirical hypotheses linking the financial depth of the economy and economic growth suggests that while some scholars focus on the importance of financial depth in economic development, others emphasize the effects of financial crises caused by rapid financial deepening, in particular credit expansion. The focus of contemporary research is on the nonlinearity of the relationship between financial depth and long-term economic growth and on defining the limit of financial development, exceeding which inhibits economic growth or negatively impacts it. Among the positives of financial deepening is the expansion of access to financial resources (increase in the volume and diversification of financial instruments), reduction of income inequality and smoothing of consumption, diversification of production risks. Among the risks of financial deepening is the deterioration of the current account due to excessive lending, unproductive investment, growth in employment in non-productive sectors, limitation of the use of fiscal policy as an instrument of countercyclical policy. It is noted that formation of the financial depth of the economy depends on the characteristics of financial resources and as well in structural, macroeconomic, political and institutional factors of economic development. While the world tends to increase the ratio of financial assets, broad money, domestic credit provided by financial institutions, the capitalization of listed companies to GDP, in Ukraine since 2014 there has been a significant decrease in these indicators, which is not typical in comparison with countries with the same level of income and demonstrates the low level of financial depth of the domestic economy.

scholarly journals Financial Institutions’ Inter Mediation and Economic Development in Nigeria

2019 ◽  
Vol 5 (1) ◽  
pp. 33-46
Author(s):  
Grace Oyeyemi Ogundajo ◽  
Adegbemi Babatunde Onakoya ◽  
Enyi Patrick Enyi ◽  
Tunji T. Siyanbola
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Private Sector ◽  
Financial Institutions ◽  
Financial Institution ◽  
Causal Effect ◽  
Real Gdp ◽  
Long Run ◽  
Integration Test ◽  
Bound Test

This paper examines the effect of intermediation capacity of the financial institutions on the Nigerian economic development (Real Gross Domestic Product (RGDP). It is a causal-effect relationship study which made use of macro data obtained from Central Bank of Nigeria (CBN) Statistical Bulletin from the period 1981-2016. The result of the Johansen co-integration test and ARDL bound test evidenced that there exist a long-run relationship between financial institutions’ activities and real GDP. ARDL regression model showed financial institution activities, particularly the loans to the private sector significantly impacted on economic growth both in the short-run and long-run The study also found that bank loans and advances, bank reserves and interest rate had insignificant negative impact on real GDP while credit to private sector significantly affected economic development of Nigeria (RGDP) Thus, economic development of Nigeria is driven by the performance of deposit money banks and concludes that the performance of deposit money banks has effect on the economic development of Nigeria. The study recommended that the banking sector should increase lending to the private sector in order to engender economic growth through the enhancement of entrepreneurial development.

scholarly journals The Relationship between Financial Development and Economic Growth: The Case of Turkey

2016 ◽  
Author(s):  
Müge Manga ◽  
Mehmet Akif Destek ◽  
Muammer Tekeoğlu ◽  
Erkut Düzakın
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Trade Liberalization ◽  
Money Supply ◽  
Financial Development ◽  
Integration Test ◽  
Domestic Credit ◽  
The Impact ◽  
Bound Test ◽  
The Relationship

The relationship between financial development and economic growth and the direction of causality between them have been received a lot of attention recently by many scholars. It is also important to analyze this relationship and the direction of causality due to implications of policies. In this study the relationship between financial development, trade liberalization and economic growth for Turkey are examined using three different models. Model 1, 2 and 3 investigate the effect of domestic loans to the private sector and trade liberalization on GDP, the impact of the domestic credit provided by banks to the private sector and trade liberalization on GDP and the effect of M2 money supply and M2 trade liberalization on GDP, respectively. Data extracted from World Development Indicators. Autoregressive-Distributed Lag Bound Test (ARDL) is used as a co-integration test to determine the long run relationship between variables. In addition, Toda and Yamamoto (1995) is utilized to test the direction of causality between financial development and economic growth according to the three financial indicators such as domestic loans to the private sector, the domestic credit provided by banks to the private sector and M2 money supply. According to the results there is a unidirectional relationship from economic growth to domestic loans to the private sector and the domestic credit provided by banks to the private sector. Additionally, the results indicate that a bidirectional relationship exist between M2 money supply and economic growth.

scholarly journals The Impact of Financial Deepening on the Economy of Nigeria (1981-2018)

2020 ◽  
pp. 12-21
Author(s):  
Udeme Okon Efanga ◽  
Chinelo Okanya Ogochukwu ◽  
Georgina Obinne Ugwuanyi
Keyword(s):  
Economic Growth ◽  
Gross Domestic Product ◽  
Private Sector ◽  
Positive Impact ◽  
Domestic Product ◽  
Financial Deepening ◽  
International Capital ◽  
Integration Test ◽  
The Many ◽  
The Impact

This study was carried out to investigate the impact of financial deepening on the Nigerian economy between 1981 and 2018. Data employed for this study was elicited from Central Bank of Nigeria Statistical Bulletin of 2018. This study employed real gross domestic product as proxy for economic growth in Nigeria (regress and), while ratio of money supply to gross domestic product, ratio of private sector credit to gross domestic product and ratio of market capitalization to gross domestic product were adopted as regressors. The co-integration test and Fully Modified Least Squares (FMOLS) Model were utilized to analyze data. Inferential results generated there from indicated that financial deepening had positive impact on the Nigerian economy within the period under review. To boost economic growth, we recommend at this time that monetary authorities implement monetary policies to increase money. In the same vein, Nigerian commercial banks should be encouraged to improve upon credit facilities made available to the private sector. Recognizing the positive impact of international capital, this study also recommends that Nigerian policy makers ease some of the many restrictions that currently limit entry of international capital. This singular act would most definitely lead to more companies being listed on the exchange. The result would be the attainment of even more depth to Nigeria’s economy.

scholarly journals Financial Intermediaries and Economic Development: Evidence on Transaction Costs of Borrowing by the Poor

2011 ◽  
Author(s):  
Vighneswara Swamy ◽  
B.K. Tulasimala
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Transaction Costs ◽  
Financial Intermediaries ◽  
Financial Deepening ◽  
The Poor ◽  
Direct Lending ◽  
Cost Efficient ◽  
The Empirical Analysis

This study, while validating the increasing role for financial intermediaries in economic development, analyzes the importance of reducing the transaction costs for financial deepening and, consequently, economic growth. It shows that higher borrowing transaction costs for the poor in particular will retard the long-term growth of rural financial markets. Further, the empirical analysis based on our primary (survey) data indicates that the microfinance models of lending offer considerably lower costs of borrowing than those in regular models of direct lending by banks. The study suggests that microfinance model of lending can provide cost-efficient avenue for speedy financial development and, subsequently, economic growth.  

scholarly journals Effect of financial deepening on economic growth: Does it encourage income group transition?

2021 ◽  
Vol 16 (4) ◽  
pp. 101-113
Author(s):  
Yuliia Shapoval ◽  
Oleksii Shpanel-Yukhta
Keyword(s):  
Economic Growth ◽  
Private Sector ◽  
Income Group ◽  
Gdp Per Capita ◽  
Financial Deepening ◽  
Credit Availability ◽  
Financial Depth ◽  
Domestic Credit ◽  
Per Capita ◽  
The Relationship

The rapid growth of financial deepening raises the problem of its effect, beneficial for economic development. This paper aims to demonstrate the relationship between economic growth (GDP per capita growth, GNI per capita) and financial depth (domestic credit to private sector and credit availability) in 142 countries, split into four income groups, over 2000–2020, using correlation analysis and data from the World Bank and the IMF. Besides, a comparative analysis of domestic credit to the private sector, economic freedom, Gini index, total government expenditure and national savings of countries that increased their income group status over 2011–2020 is presented. Financial deepening (increased credit availability and expansion of domestic credit to the private sector) encourages economic growth (via GNI per capita and GDP per capita growth). Although the presence of a nonlinear relationship between economic growth (GDP per capita growth) and financial depth (domestic credit to private sector and credit availability) over 1991–2020 is insufficient, there is a linear relationship between GNI per capita and credit availability, between credit availability and domestic credit to the private sector for the same sample of countries over 2000–2020. Meanwhile, there is a tendency towards a decrease in the correlation between GNI per capita and GDP per capita growth. Given the revealed linear correlation between domestic credit to the private sector and GNI per capita, financial deepening positively impacts income growth, and this dependence strengthens with increasing income levels. Target values of domestic credit to the private sector are proposed for the income group transition. AcknowledgmentThe paper was funded as a part of the “Relationship between financial depth and economic growth in Ukraine” research project (No. 0121U110766), conducted at the State Institution “Institute for Economics and Forecasting of the NAS of Ukraine”.

An Empirical Analysis of the Relationship between Economic Growth and Energy Utilization in China

2013 ◽  
Vol 734-737 ◽  
pp. 1666-1670
Author(s):  
Fei Hu Yang ◽  
Peng Zhang ◽  
Xiao Wei Wang
Keyword(s):  
Economic Growth ◽  
Empirical Analysis ◽  
Energy Utilization ◽  
Correction Model ◽  
Vector Autoregressive ◽  
Integration Test ◽  
Recycling Economy ◽  
The Relationship ◽  
The Empirical Analysis

Based on the co-integration test, error correction model and vector autoregressive model, the empirical analysis results show a long-term co-integration relationship between economic growth and energy utilization in China, energy consumption increased by 1%, GDP will increase by 1.342%. In order to raise the efficiency of energy utilization during China's economic development, suggestions like saving energy conservation, reducing emission and recycling economy have been proposed.

Study on Dynamic Relationship between Economic Growth and Energy Consumption in Chongqing - Based on 1980-2011 Data

2013 ◽  
Vol 448-453 ◽  
pp. 4319-4324
Author(s):  
Sheng Wang ◽  
Chun Yan Dai ◽  
En Chuang Wang ◽  
Chun Yan Li
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Energy Consumption ◽  
Energy Demand ◽  
Industrial Structure ◽  
Impulse Response Function ◽  
Improve Energy Efficiency ◽  
Dynamic Relationship ◽  
Equilibrium Relationship

Analyzed the dynamic interaction characteristics of Chongqing Economic growth and energy consumption between 1980-2011 based on vector auto regression model, impulse response function. The results showed that: 1 Between the Chongqing's economic growth and energy consumption exist the positive long-term stable equilibrium relationship, Chongqing's economic development depending on energy consumption is too high, to keep the economy in Chongqing's rapid economic development, energy relatively insufficient supply sustainable development must rely on the energy market, which will restrict the development of Chongqing's economy. 2At this stage, Chongqing continuing emphasis on optimizing the industrial structure to improve energy efficiency at the same time, the key is to establish and improve the energy consumption intensity and total energy demand "dual control" under the security system, weakening the energy bottleneck effect on economic growth.

DEMOCRACY, ECONOMIC COMPLEXITY AND SOCIO-ECONOMIC DEVELOPMENT: PROBLEMS OF INTERCONNECTION AND WAYS OF THEIR INCREASE IN UKRAINE

2018 ◽  
Author(s):  
Anna Smahliuk ◽  
◽  
Tetiana Pokotylo ◽  
Keyword(s):  
Economic Growth ◽  
Economic Development ◽  
Democratic Institutions ◽  
Economic Complexity ◽  
Multiplier Effect ◽  
Socio Economic Development ◽  
National Production ◽  
Level Of Knowledge ◽  
Sustainable Economic Growth

The article explores the factors that allow the economies of the countries of the world to achieve sustainable economic growth at different stages of the country's economic development, depending on the level of GDP per capita. Among which are highlighted: basic factors, efficiency factors and innovative factors. For the Ukrainian economy, which is at the stage of focusing on efficiency, the issues of the place, significance and level of economic complexity of the Ukrainian economy and ensuring sustainable economic growth on this basis are considered. Economic diversification and complexity are defined as key drivers of long-term growth. The dynamics of the index of economic complexity in Ukraine is analyzed, modern trends are revealed. Directions and strategic approaches to the diversification of national production are proposed, which could have a significant multiplier effect, increase the complexity and level of knowledge in the economy. It also provides evidence on the relationship between socio-economic development, values of self-expression and democratic institutions. The conclusion is formulated: socio- economic development leads to the spread of the values of self-expression, and they, in turn, to the establishment and strengthening of democratic institutions.

Financial Deepening, Financial Intermediation and Nigerian Economic Growth: Time Variant Analysis

2019 ◽  
pp. 60-73
Keyword(s):  
Economic Growth ◽  
Interest Rate ◽  
Gross Domestic Product ◽  
Private Sector ◽  
Money Supply ◽  
Domestic Product ◽  
Financial Deepening ◽  
Causality Test ◽  
Real Gross Domestic Product ◽  
Long Run

This study examines financial deepening, financial intermediation and Nigerian economic growth. The main purpose is to examine the relationship between financial deepening and Nigerian economic growth while the specific objectives are to examine the impact of interest rate, capital market development, rational savings, credit to private sector and broad money supply on the growth of Nigerian. Secondary data of the variables were sourced from the publications of Central Bank of Nigeria (CBN) from 1981-2017. Nigerian Real Gross Domestic Product (RGDP) was used as dependent variable while Broad money supply (M2), Credit to Private Sector (CPS), National Savings (NS), Capital Market Capitalization (CAMP) and Interest Rate (INTR) was used as independent variables. Multiple regressions with E-view statistical package were used as data analysis techniques. Cointegration test, Augmented Dickey Fuller Unit Root Test, Granger causality test was used to determine the relationship between the variable in the long-run and short-run. R2, F – statistics and β Coefficients were used to determine the extent to which the independent variable affects the dependent variable. It was found from the regression result that Broad Money Supply, credit to private sector have position effect on the growth of Nigerian Real Gross Domestic Product while National Savings, Capitalization and Interest Rate on Nigeria Real Gross Domestic Product. The co-integration test revealed presence of long-run relationship among the variables, the stationary test indicated stationarity of the variables at level. The Granger Causality Test found bi – variant relationship from the dependent to the independent and from the independent to the dependent variables. The regression summary found 99.0% explained variation, 560.5031, F – statistics and probability of 0.00000. From the above, the study concludes that financial deepening has significant relationships with Nigerian economic growth. We recommend that government and the financial sector operators should make policies that will further deepen the functions of the financial system to enhance Nigerian economic growth.

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