scholarly journals The Reasons for Additional Growth Limit of Consumer Non-Purpose Loans in the Banking Sector of Bosnia and Herzegovina

2018 ◽  
Vol 15 (26) ◽  
Author(s):  
Dragan Jović
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Banking Sector ◽  
Current Account Deficit ◽  
Point Of View ◽  
Current Account Balance ◽  
Economic Point ◽  
Consumer Loans ◽  
Growth Limit ◽  
The Current Account

The growth in consumer non-purpose loans leads to the reduction in BiH current account balance and amplifies the current account deficit. According to regression models, the commercial loan has the same effect on the current account. However, in dynamic VAR models, a commercial loan has, either neutral influence on the current account balance, or contributes to its mild growth. A commercial loan is necessary for BiH economy, because the private sector is the main factor of the economic growth, while a consumer non-purpose loan generates mainly demand for import. When a credit growth is very low, the credit is economic and not free good and additional need for the direct regulation of credit appears, especially in countries with underdeveloped financial market. The share of private companies in the credit distribution is reduced and from the economic point of view, redistribution of loans can be made only at the expense of consumer loans. Additional growth limit on the consumer non-purpose loan, which is composed of 74.2% of total consumer loans, and 34.9% of all bank’s loans (10/2016), is one of the preconditions for the decrease of current account deficit, economic growth and economic development acceleration.

scholarly journals Longing for economic growth without current account deficit: Chinese model

2016 ◽  
Vol 13 (3) ◽  
pp. 3927 ◽  
Author(s):  
Deniz Züngün
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Current Account Deficit ◽  
Current Account Balance ◽  
Causality Test ◽  
Economic Growth Rate ◽  
Chinese Model ◽  
Foreign Countries ◽  
Global Fluctuations ◽  
The Current Account

After 1978, China implemented some reforms and branched out to foreign countries. China, applying a strategy based on export and keeping its domestic currency, Yuan, in balance during this process, has increased its economic growth. However, current value increase in dollar and global fluctuations has also affected the growth in China. Considering the fact that growth and current account balance is one of the most important variables of a nation, it is an issue of concern how the decreasing economic growth rate of China in 2015, compared to previous years, will affect the current account balance. Thereby, this study examines the effect of Chinese growth, with the application of export based industry strategy, on the current account balance between the years of 2000-2015. As a result of the study, a bidirectional relation is determined with Granger Causality Test between economic growth and current account balance. During the Regression Analysis, it is ascertained that 1% of increase in economic growth will incur 0.32% of increase in current account.

scholarly journals WORLD EXPERIENCE: COMMERCIAL BANK CREDIT AND ECONOMIC GROWTH RELATIONSHIP

2020 ◽  
pp. 6-19
Author(s):  
Davit Aslanishvili
Keyword(s):  
Economic Growth ◽  
Large Scale ◽  
Banking Sector ◽  
Point Of View ◽  
Bank Credit ◽  
Main Function ◽  
Economic Point ◽  
Market Factors ◽  
Credit Portfolio ◽  
The Impact

This research focuses on the problem of large scale disproportion of success in the development of the banking sector and mostly unsuccessful development of the real sector of the economy. It should be noted that this disproportion is a subject of consideration in contemporary economic literature and our research is an attempt to broaden the issue and share ideas inside the international scientific circles. The main problem in the research is the impact of the banking sector's credit portfolio and the functioning of credit markets on the economic growth of the country. In this regard, it is very important to identify, study the macroeconomic stabilization and accelerated economic growth of the country and analyse the impact mechanisms of the credit market factors on economic growth. The conclusion that combines many of the research and opinions given in the survey can be as follows: From the economic point of view, the main function of banks is to increase the financing/lending of funds as the core point to increase investments in the economy. Thus, the development of the country in economic terms depends on the increase of investments. At present, it is in the hands of the banking sector whether to lead us to economic immobility or to accelerate the country's economic development through efficient allocation of resources.

scholarly journals Structural and cyclical factors of Serbia’s current account

2018 ◽  
Vol 63 (217) ◽  
pp. 75-97 ◽  
Author(s):  
Radovan Kovacevic
Keyword(s):  
Current Account ◽  
Structural Changes ◽  
Current Account Deficit ◽  
Current Account Balance ◽  
Full Time ◽  
Structural Factors ◽  
Crisis Period ◽  
The Impact ◽  
The Current Account

This paper examines the impact of structural and cyclical factors on Serbia?s current account. We have applied several filters to turn off the long-term (structural) component and isolate the influence of cyclical factors. In this paper, we show that structural factors were more important determinants of the current account deficit in the full-time sample (1997-2016), while cyclical factors showed a stronger impact in the post-crisis period when the deficit was reduced. Although they lost their intensity during the crisis and in the post-crisis period, the structural factors determine the trend of the current account balance in the long-term. For further improvement of the current account, measures to increase exports should be taken. The structural changes of production, the wider range of support for export financing to small and medium-sized enterprises, and the application of advanced technologies in manufacturing could help to reduce the trade deficit, making the current account deficit sustainable.

scholarly journals Analysis of Current Account Deficit Determinants of Balance of Payments in Fixed and Flexible Exchange Rate Regimes: A Comparative Study in CFA Franc and Non-Franc Zones

2017 ◽  
Vol 3 (3) ◽  
pp. 447
Author(s):  
Remy Hounsou
Keyword(s):  
Current Account ◽  
Current Account Deficit ◽  
Flexible Exchange Rate ◽  
Balance Of Payments ◽  
Current Account Balance ◽  
Domestic Saving ◽  
Franc Zone ◽  
Financial Variables ◽  
The Impact ◽  
The Current Account

<p><em>This study compares the impact of certain economic and financial variables on the level of the deficit in the current account of the balance of payments of the countries of the Franc zone and certain countries of the non-Franc zone situated south of the Sahara. The empirical results of the study based on panel data models covering the period 1990-2015 indicate that none of the two zones behaves better against the current account deficit of the balance of payments and that no zone is more competitive than the other. Finally, it was clear from our analysis that the variables of gross domestic, saving and the change in the terms of trade better explain the change in the current account balance in the Franc zone, whereas the variables of net foreign transfers and gross domestic saving impact the most the current account deficit in non-CFA zone.</em></p>

scholarly journals The Twin Deficits Phenomenon: Evidence from Pakistan

2000 ◽  
Vol 39 (4II) ◽  
pp. 535-550 ◽  
Author(s):  
Anjum Aqeel ◽  
Mohammed Nishat
Keyword(s):  
Fiscal Policy ◽  
Current Account ◽  
Budget Deficit ◽  
Current Account Deficit ◽  
Theoretical Work ◽  
Current Account Balance ◽  
Improved Performance ◽  
Necessary And Sufficient ◽  
The Relationship ◽  
The Current Account

Like most developing countries a steady budget deficit in Pakistan is the primary cause of all major ills of the economy. It has varied between 5.4 to 8.7 percent during last two decades. On the other hand the current account deficit varied between 2.7 to 7.2 percent during the same period. The variations in fiscal policy can lead to predictable developments in an open economy’s performance on current account, remains a controversial issue. An important aspect of this issue concerns what is termed as twin deficit analysis, according to which fiscal deficits and current account balances are very closely related so that reductions in the former are both necessary and sufficient to obtain improved performance in the later. Theoretical work on the relationship that exist between variations in fiscal policy and the current account balance has been based upon two types of models. These models are constructed from postulated behavioural relationships that purport to describe how the economy works in aggregate without explaining the behaviour of agents who make up the economy [Mundel (1963); Branson (1976); Dornbusch (1976); Kawai (1985) and Marston (1985)]. The second type of model, derives the important macroeconomic relationships from the microfoundations of individual optimising behaviour [Dixit (1978); Neary (1980); Obstfeld (1981); Persson (1982); Kimbrough (1985); Frenkel and Razin (1986); Cuddington and Vinals (1985, 1986a) and Moore (1989)]. However, both of these approaches have yielded divergent results.

The Impact of Current Account Deficit on Economic Growth: An ARDL Approach

2020 ◽  
Vol 21 (1) ◽  
pp. 76-92
Author(s):  
Tamma Reddy ◽  
T. Sita Ramaiah
Keyword(s):  
Economic Growth ◽  
Exchange Rate ◽  
Current Account ◽  
Unit Root ◽  
Current Account Deficit ◽  
External Debt ◽  
Unit Root Test ◽  
Output Growth ◽  
The Impact ◽  
The Current Account

In this study, we examine the linkages between External debt, Exchange rate, Current account deficit, and GDP at Factor cost for India over the period of 1975-76 to 2018- 19 using the Unit root test and Autoregressive Distributed Lag (ARDL). The results of the unit root test reveal that GDP growth rate and External debt are integrated at the level I(0); while the Current Account deficit and Exchange rate are integrated at first order I(1). The results of the ARDL technique reveal that the current account deficit has a positive and significant impact on Real GDP. It clearly reflects the role of imports in accelerating the growth of a developing economy like India. There is also evidence that the external debt has a positive and significant impact on the Current account deficit while the Exchange rate does not have an impact on the Current account deficit. The authors opine that the external debt assists in a gradual reduction in the current account deficit and contributes to economic growth by narrowing down the saving-investment gap. As the demand for Indian exports is inelastic in the global market, the country has not benefitted from the depreciation of its currency. The authors stressed the need for focusing on further diversification of its export markets, creating a conducive environment for attracting longer-term FDIs, liberalization, promoting commercial services exports, and achieving exchange rate stability in the context of the USA-China trade war and stagnation in the world output growth. Huge untapped potential for IT-enabled services should be exploited to promote service trade. The authors point out the current account deficit in the range of 2-3 percent of GDP can be manageable.

scholarly journals Current Account Balance in Emerging Asia

2021 ◽  
Vol 16 (1) ◽  
pp. 12-25
Author(s):  
Kivanç Halil Ariç ◽  
Siok Kun Sek ◽  
Miguel Rocha de Sousa
Keyword(s):  
Economic Growth ◽  
Interest Rates ◽  
Current Account ◽  
Causal Effect ◽  
Panel Data Analysis ◽  
Government Expenditure ◽  
Current Account Balance ◽  
Important Indicator ◽  
Long Run ◽  
The Current Account

Abstract The current account balance is an important indicator which reveals information on a country’s economic situation such as investments, capital flows, and indebtedness. The main purpose of this study is to examine the current account balance conditions in emerging Asian countries. In this respect, the long-run and causality relationship between current account balance, economic growth, government expenditure, real interest rates, and foreign direct investment was examined. The panel data analysis was applied using the data dated 1986 to 2015. Our results revealed a causal effect from economic growth and government expenditure to current account balance mainly dependent on saving tendency.

scholarly journals Testing the Twin Deficit Hypothesis: Evidence from the Republic of North Macedonia

2020 ◽  
Vol 11 (3) ◽  
pp. 45-62
Author(s):  
Vesna Bucevska
Keyword(s):  
Current Account ◽  
Budget Deficit ◽  
Current Account Deficit ◽  
Point Of View ◽  
Special Importance ◽  
The European Union ◽  
Vector Autoregressive ◽  
Long Run ◽  
The Republic ◽  
The Current Account

AbstractBackgroundAn econometric analysis of the twin deficit hypothesis is of special importance for the Republic of North Macedonia in view of its perspective membership in the European Union and from the point of view of its macroeconomic stability in the long run.ObjectivesThe objective of this paper is to test empirically the validity of the twin deficit hypothesis in the Republic of North Macedonia.Methods/ApproachTo achieve this objective, we used actual quarterly data on Macedonia's budget and the current account deficit in the period from the first quarter of 2005 until the fourth quarter of 2017 and applied several econometrics methods: the Granger causality, a vector autoregressive (VAR) and a vector error correction model (VECM).ResultsThese findings point to the conclusion that efforts focused on improving the current account imbalances through fiscal policy will be inefficient in the short run.ConclusionsHowever, the existence of a long run relationship between the budget deficit and the current account deficit indicates the necessity of policy initiatives focused not only on reducing the budget deficit, but also on improving the external position of the country though export promotion.

scholarly journals Colombia

2020 ◽  
Vol 20 (104) ◽  
Author(s):  
Keyword(s):  
Economic Growth ◽  
Current Account ◽  
Current Account Deficit ◽  
Oil Prices ◽  
External Imbalances ◽  
Financial Conditions ◽  
Policy Frameworks ◽  
First Time ◽  
The Current Account

Before the arrival of the Covid-19 pandemic, Colombia’s economy had remained resilient—owing to very strong policy frameworks, well-executed policies and immigration from Venezuela. External vulnerabilities increased, however, alongside wider external imbalances. Strong internal demand lifted economic growth to 3.3 percent in 2019 and widened the current account deficit to 4.3 percent of GDP. In the wake of a global shock from the pandemic, Colombia’s economy is expected to contract for the first time in two decades, alongside a looming global contraction, lower oil prices, and tightening financial conditions. In response to disrupted activity, the authorities have adopted a set of measures to boost liquidity and support growth domestically.

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