wealth weather risk and the composition and profitability of agricultural investments despite the growing evidence that farmers in low income environments are risk averse there has been little empirical evidence on the importance of risk in shaping the actual allocation of production resources among farmers differentiated by wealth the authors use panel data on investments in rural india to examine how the composition of productive and nonproductive asset holdings varies across farmers with different levels of total wealth and across farmers facing different degrees of weather risk income variability is a prominent feature of the experience of rural agents in low income countries the authors report evidence based on measures of rainfall variability that the agricultural investment portfolio behavior of farmers in such settings reflects risk aversion due evidently to limitations on consumption soothing mechanisms such as crop insurance or credit markets the authors results suggest that uninsured weather risk is a significant cause of lower efficiency and lower average incomes a one standard deviation decrease in weather risk measured by the standard deviation of the timing of the rainy season would raise average profits by up to 35 percent among farmers in the lowest wealth quartile moreover rainfall variability induces a more unequal distribution of average incomes for a given distribution of wealth wealthier farmers are willing to absorb significant risk without giving up profits to reduce production risk smaller farmers have to invest their limited wealth in ways that reduce their exposure to risk at the cost of lower profit rates the authors found that at high levels of rainfall variability differences in rates of profit per unit of agricultural assets were similar across classes of wealth but over the sample range of rainfall variability these rates of profit were always higher for the poorer farmers than for the wealthier ones suggesting that the disadvantages of small farmers in risk diffusion are more than offset by their labor cost advantage

financial development and barriers to the cross border diffusion of financial innovation this paper explores the determinants of financial development by focusing on the role played by barriers to the diffusion of financial technology these barriers are measured using human genetic distance from the technology frontier the results based on cross sectional data for 123 countries suggest that genetic distance to the global frontier has an economically and statistically significant effect on financial development in that countries that are genetically far from the technology leader tend to have lower levels of financial development genetic distance is found to have the largest effect even after controlling for other determinants of financial development established in the literature these findings indicate that cultural barriers to the diffusion of financial technology across borders impact financial development by influencing the follower countries ability to adopt and adapt innovations from the frontier

financial development and economic growth abstract this paper examines the empirical relationship between long run growth and financial development proxied by the ratio between bank credit to the private sector and gdp we find that this proxy is positively correlated with growth in a large cross country sample but its impact changes across countries and is negative in a panel data for latin america we argue that the latter findings is the result of financial liberalization in a poor regulatory environment our findings also show that the main channel of transmission from financial development to growth is the efficiency rather than the volume of investment

the role of social capital in financial development to identify the effect of social capital on financial development we exploit social capital differences within italy in high social capital areas households are more likely to use checks invest less in cash and more in stock have higher access to institutional credit and make less use of informal credit the effect of social capital is stronger where legal enforcement is weaker and among less educated people these results are not driven by omitted environmental variables since we show that the behavior of movers is still affected by the level of social capital of the province where they were born

on flexibility in oligopoly abstract this paper demonstrates that even when firms initial moves are simultaneous the mere opportunity to wait out the opponent s move may be as harmful as a second mover disadvantage

government ownership of banks institutions and economic growth we present new cross country evidence that reveals that during 1995 2007 government ownership of banks has been robustly associated with higher long run growth rates we also show that previous results suggesting that government ownership of banks is associated with lower long run growth rates are not robust to conditioning on more fundamental determinants of economic growth

are modern financial systems shaped by state antiquity we demonstrate that existing differences in financial development between countries can be explained by the cumulative variations in their levels of state experience since 1 ad this dimension of early historical development has not been considered so far in studies that analyze the determinants of financial development the estimation allows for all major theories established in the literature as possible explanations for the disparity of financial development across the globe significance of state antiquity is robust to the use of alternative indicators of financial development the consideration of different lengths and periods of statehood and controlling for a range of variables or country characteristics our results highlight the important role of statehood in propelling financial system development and thus provide some support to the view that historically determined differences in the early start developmental advantage provide the basis for explaining the fundamental sources of variations in financial development between countries today

an analysis of declining incidence of regular labour contracts in rural india evidence obtained from the icrisat villages in india suggests that the decline of regular contracts has been accompanied by the growth in real wages and casualisation of the rural labour force in view of this evidence the article examines the causes of the declining incidence of regular contracts in rural india we argue that this has been caused by the leftward shift in the regular labour supply curve due to improved employment and credit opportunities and not an upward movement of the labour demand curve as manifested by the increase in real wages over the years

a limited dependent analysis of the choice of regular labour contract in seasonal agriculture the paper examines both theoretically and empirically the factors determining the demand for regular labour in seasonal agriculture in an implicit contract framework it is argued that there are hoarding costs of regular labour in the slack period when there is not much work to be done consequently the number of regular labour employed is constrained by the hoarding cost where larger employment intensive farms tend to hire more regular labour evidence from the icrisat villages in india too show that though the marginal costs of regular labour are zero there are significant hoarding costs of regular labour among small farms so that larger farmers are the major demanders of regular labour estimates of the double hurdle model jointly determining the probability of hiring regular labour and demand for regular labour hours if a regular labour is hired are shown to be an improvement over univariate tobit estimates of the demand for regular labour hours only

casual and regular contracts workers self selection in the rural labour markets in india the article examines workers choice between casual and regular contracts it departs from existing theories in that in addition to wage considerations it highlights the significance of time and credit constraints results obtained from the icrisat villages in india suggest that risk averse landless labourers ought to prefer casual to regular contracts because earnings from casual contracts are higher however this argument gets strongly modified once we consider that a large part of regular wages are received in advance and that the comparative attractiveness of regular contracts depends crucially on whether labourers have access to credit and other jobs

finance and inequality the case of india although theory emphasizes the role of financial market frictions in explaining income inequality there is little empirical research exploring how financial development and financial sector reforms influence the evolution of income inequality this article examines how finance impacts income inequality in india using annual time series data for over half a century the results indicate that while financial development helps reduce income inequality financial liberalization seems to exacerbate it the results are robust to the use of different measures for financial development and financial liberalization although the relationship between financial development and economic growth has been extensively studied in the literature see for example king and levine 1993 demetriades and hussein 1996 arestis and demetriades 1997 levine loayza and beck 2000 bell and rousseau 2001 ang and mckibbin 2007 little is known about how finance impacts income inequality the importance of the finance inequality relationship has recently been highlighted in an insightful survey article by claessens and perotti 2007 they indicate that while financial development can help reduce income inequality financial liberalization captured by established interests may do the opposite the theoretical predictions of the effects of finance on income inequality are controversial rajan and zingales 2003b argue that improvements in the formal financial sector primarily benefit the rich greenwood and jovanovic 1990 predict a nonlinear relationship between financial development and income inequality where it is hypothesized that income inequality first increases with the degree of sophistication in the financial systems then stabilizes and eventually declines others propose that the presence of financial market imperfections deters the poor from borrowing adequately to invest in human and physical capital implying that financial development helps alleviate income inequality banerjee and newman 1993 galor and zeira 1993 aghion and bolton 1997 mookherjee and ray 2003 2006 given that theories provide ambiguous predictions regarding the effects of finance on the distribution of income it is useful to approach the issue at the empirical level this could facilitate our understanding of the relationship between finance and inequality and help us to assess the validity of each theoretical model despite the important role of financial market frictions in the theories of poverty and income inequality researchers so far have not adequately addressed whether financial

culture openness and finance abstract differences in culture proxied by differences in religion and language cannot be ignored when examining why investor protection differs across countries we show that a country s principal religion predicts the cross sectional variation in creditor rights better than a country s natural openness to international trade its language its income per capita or the origin of its legal system catholic countries protect the rights of creditors less well than protestant countries a country s natural openness to international trade mitigates the influence of religion on creditor rights culture proxies are also helpful in understanding how investor rights are enforced across countries

financial institutions and markets across countries and over time the updated financial development and structure database this article introduces the updated and expanded version of the financial development and structure database the database includes indicators on the size efficiency and stability of banks nonbank financial institutions and equity and bond markets over 1960 2007 it also contains indicators of financial globalization

financial liberalization financial sector development and growth evidence from malaysia abstract the objective of this paper is to examine whether financial development leads to economic growth or vice versa in the small open economy of malaysia using time series data from 1960 to 2001 we conduct cointegration and causality tests to assess the finance growth link by taking the real interest rate and financial repression into account the empirical evidence suggests that financial liberalization through removing the repressionist policies has a favorable effect in stimulating financial sector development financial depth and economic development are positively related but contrary to the conventional findings our results support robinson s view that output growth leads to higher financial depth in the long run

determinants of occupational change and mobility in rural india with a view to redress the dearth of economic analysis on occupational dynamics in rural household economies this study examines the nature and characteristics of occupational change and mobility in rural india using the unique wider data set from six villages in west bengal india the factors causing a change of primary occupation among those who tried to change occupation over a twelve month recall period has been analysed bivariate probit estimates jointly determining the probability of trying to change occupation and having been successful suggest that success in changing occupation depends crucially on socially constructed status being older male from larger farming families or having higher schooling experience they also exemplify the effects of regional diversity levels of prosperity and different patterns of employment between agricultural and non agricultural activities

financial development and economic growth views and agenda this critique argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth the body of work would push even most skeptics toward the belief that the development of financial markets and institutions is a critical and inextricable part of the growth process and away from the view that the financial system is an inconsequential sideshow responding passively to economic growth many gaps remain however and the paper highlights areas in acute need of additional research

institutions and the long run impact of early development we study the role of institutional development as a causal mechanism of history affecting current economic performance several indicators capturing different dimensions of early development in 1500 ad are used to remove the endogenous component of the variations in institutions these indicators are adjusted with large scale movements of people across international borders using the global migration matrix of putterman and weil 2010 to account for the fact that the ancestors of a population have facilitated the diffusion of knowledge when they migrate the exogenous component of institutions due to historical development is found to be a significant determinant of current output by demonstrating that the relationship between early development and current economic performance works through the channel of institutions and that better institutions can be traced back to historical factors the results of this paper shed some light on how history has played a role in shaping long run comparative development

financial development and openness evidence from panel data abstract this paper addresses the empirical question of whether trade and financial openness can help explain the recent pace in financial development as well as its variation across countries in recent years utilising annual data from developing and industrialised countries and dynamic panel estimation techniques we provide evidence which suggests that both types of openness are statistically significant determinants of banking sector development our findings reveal that the marginal effects of trade financial openness are negatively related to the degree of financial trade openness indicating that relatively closed economies stand to benefit most from opening up their trade and or capital accounts although these economies may be able to accomplish more by taking steps to open both their trade and capital accounts opening up one without the other could still generate gains in terms of banking sector development thus our findings provide only partial support to the well known rajan and zingales hypothesis which stipulates that both types of openness are necessary for financial development to take place