DOES CORRUPTION SAND THE WHEELS OF FINANCIAL SECTOR DEVELOPMENT? EVIDENCE FROM GLOBAL PANEL DATA

This study examines the effects of corruption and political instability and violence on the financial sector development. We estimate the impact for a panel of countries classified by income groups and regulatory quality. The study considers the period from 1996 to 2015 for analysis. The empirical models of this study test the linear as well as nonlinear relationships between corruption and financial sector development. Our analysis utilizes a dynamic panel data model and takes care of the potential endogeneity problem in estimation. The results show that corruption has a negative effect on financial sector development for all as well as different income-group countries. Our results further show that the effects of corruption are nonlinear in nature and indicate that corruption is more financial development-reducing when its level is very high. We also test the joint effect of corruption and political instability and violence on financial development. It largely shows that their combined effect is positive, implying that widespread corruption can positively affect financial development if a country is suffering from an unstable political institution.

The convergence of financial sector in Asia

This study aims to identify the convergence of financial sector development and the effect of macroeconomic variables on each financial sector development indicator in Asia. The sample used consists of 24 countries in Asia during the period 2010-2018. Identification of convergence using ?-convergence absolute and conditional. Indicators are used to represent the development of the financial sector namely private credit, liquid liabilities, stock market capitalization, and stock market turnover. Empirical evidence was based on the Generalized Method of Moment (GMM) estimation technique. The results showed that there was convergence in Asia and that macroeconomic variables had a significant effect on the development of the financial sector.

Does Financial Sector Development Hinders or Promotes Human Development in Nigeria? Asymmetric and Causality Analysis

This study examines the relationship between financial sector development and human development in Nigeria for the period of 1986 to 2018 using Non-linear Auto Regressive Distributed Lag (NARDL) and Toda Yamamoto Granger non-causality approaches. Empirical findings that emanated from the study reveal the existence of nonlinear relationship between financial sector development indices and human development in Nigeria. Further, feedback from the Toda Yamamoto Granger non-causality test shows that money supply constitutes the only variable exerting bidirectional nexus with human development. Conversely, bank deposit appeared to have a unidirectional relationship with human development whereas other indicators like domestic credit to GDP and bank penetration have no causal relationship with human development within the period of study. Prominent policy implication derivable from the empirical analyses suggests the need for the monetary policy authority to place more emphasis on quantity-based monetary tools such as liquidity ratio and reserve ratio for managing the economy.

The Short- and Long-Term Effects of Financial Sector Development on Economic Growth in Saudi Arabia: An ARDL Model Analysis

The goal of this research was to explore Financial Development and Economic Growth in Saudi Arabia. This would provide evidence pertaining to the relationship between financial sector development and economic growth within the country’s context. In regard to methodology, this study purposed an Autoregressive Distributed Lag (ARDL) model and an ECM model to underline the short and long-term dynamics. To measure financial development, this study implemented the value of credits provided by the financial sector to the private sector divided by GDP. Furthermore, based on a comprehensive and holistic reading of the literature, this study also implemented the control variables of trade openness, gross fixed capital formation, and the labor force. The findings show that there are long- and short-term relationships between financial development and economic growth. The regression coefficients for the ARDL model and Unrestricted Error Correction Model (ECM) were found to be statistically significant at the 10% level. All control variables were found to influence the relationship between the independent and dependent variables.

Financial Sector Development, Trade Openness and Economic Growth Nexus: Evidence from SAARC Countries

To boost economic growth, SAARC countries resorted to trade liberalization policies since mid-1980s, therefore, now it is high time to evaluate the outcomes of this outward-oriented trade regime. Available literature confined the potential gain with the trading country’s status of the financial sector development. This study therefore empirically investigates the complementarity between domestic financial sector and trade openness for its growth effectiveness in the case of SAARC region. The empirical analysis basis upon the panel of six SAARC countries, using panel co-integration technique for the period 1980-2014. The empirical estimates of FMOLS and DOLS indicate that countries holding relatively developed domestic financial sectors enjoy larger gains from trade openness, which finally translates into economic progress. To be exact, the country’s domestic financial sector plays a complementary role between openness and growth in SAARC countries. Results hence suggest that SAARC countries need to lay higher emphasis on the development of the domestic financial sector.

INTERACTION BETWEEN FINANCIAL SECTOR DEVELOPMENT AND MICROFINANCE INSTITUTION (MFIs) PERFORMANCE IN SOUTHEAST ASIA

This study aims to examine the effect of financial sector development on the financial and social performance of MFIs. This research is a quantitative research. The population is all MFIs listed on MixMarket. This study uses purposive sampling with MFI criteria that have complete data needed from 1999 to 2019. This study uses panel data because it uses MFIs from nine countries but in different years. Data collected using data from MixMarket with a research period between 1999 and 2019. The results show that the revival of the financial sector has a negative impact on the independence of MFIs. On the other hand, progress in the financial sector also has a negative impact on MFIs for the poor. This condition indicates that there is competition between the two, as developments in the financial sector have a negative impact on the MFI's ability to generate higher incomes. The implication of this finding is that policy makers are more careful in determining the operational reach of the traditional financial sector and MFIs. Abstrak: Penelitian ini bertujuan untuk menguji pengaruh pengembangan sektor keuangan terhadap kinerja keuangan dan sosial LKM. Penelitian ini adalah penelitian kuantitatif. Populasinya adalah semua LKM yang terdaftar di MixMarket. Penelitian ini menggunakan purposive sampling dengan kriteria LKM yang memiliki kelengkapan data yang dibutuhkan dari tahun 1999 hingga 2019. Penelitian ini menggunakan data panel yang karena menggunakan LKM dari sembilan negara tetapi berbeda tahun. Data penelitian dikumpulkan dengan menggunakan data dari MixMarket dengan periode penelitian antara 1999 hingga 2019. Hasil penelitian menunjukkan bahwa kebangkitan sektor keuangan berdampak negatif terhadap independensi LKM. Di sisi lain, kemajuan sektor keuangan juga berdampak negatif pada jangkauan LKM kepada masyarakat miskin. Kondisi ini menunjukkan adanya persaingan di antara keduanya, karena perkembangan sektor keuangan berdampak negatif pada kemampuan LKM untuk menghasilkan pendapatan yang lebih tinggi. Implikasi dari temuan ini adalah pembuat kebijakan lebih berhati-hati dalam menentukan jangkauan operasional sektor keuangan tradisional dan LKM.