the interest group theory of financial development in china openness and the role of interest groups the interest group theory of financial development predicts that the incumbents opposition to financial development will be weaker when an economy is open to both trade and capital flows based on regressions of financial development on trade and financial openness existing studies only provide indirect tests of the hypothesis and deliver mixed findings this paper proposes models for direct tests of interest group theory for china using chinese cross province data we define and measure interest groups based on the close tie between state owned enterprises and local government in china the empirical results show that the opposition from interest groups to financial development cannot be weakened in provinces with high trade or financial openness alone however the opposition is indeed weakened in provinces with high levels of both trade and financial openness these results provide robust support for interest group theory in accounting for cross province differences and time series variation in financial development in china

finance and the sources of growth at various stages of economic development this article studies the effects of financial development on the sources of growth in different groups of countries recent theoretical work shows that financial development may affect productivity and capital accumulation in different ways in industrial versus developing countries this hypothesis is tested with panel data from 74 countries using gmm dynamic panel techniques results are consistent with the hypothesis finance has a strong positive influence on productivity growth primarily in more developed economies in less developed economies the effect of finance on output growth occurs primarily through capital accumulation jel o4 g1

uncertainty economic reforms and private investment in the middle east and north africa during the 1980s and the 1990s private investment in the middle east and north africa mena has on average shown a decreasing or stagnant trend this contrasts with the situation of the asian economies where private investment has always been more dynamic in this paper it is empirically shown for a panel of 39 developing economies among which four mena countries that in addition to the traditional determinants of investment such as the growth anticipations and the real interest rate government policies explain mena s low investment rate insufficient structural reforms which have most of the time led to poor financial development and deficient trade openness have been a crucial factor for the deficit in private capital formation the economic uncertainties of the region have represented another factor of the firm s decisions not to invest these uncertainties have consisted of the external debt burden and various measures of volatility

opening a stock exchange abstract a large body of theoretical and empirical literature has established a positive relationship between levels of stock market development and economic growth however previous empirical work has been based on samples of approximately 40 countries with the most highly developed financial systems since 1950 over 70 countries have opened their first national stock exchanges can such exchanges increase economic growth i present a data set of my construction that describes the exchange openings that occurred between 1960 and 1998 and find that these exchanges have generated increases in growth during their first 5 years of existence although the longer term results are ambiguous

the time varying nairu and its implications for economic policy the nairu the unemployment rate consistent with a constant rate of inflation is estimated in this paper as a parameter allowed to vary over time value is determined in an econometric model where the inflation rate depends on its past values demand and supply shocks the nairu estimated for the gdp deflator varies over the past forty years within 5 4 to 6 5 percent its estimated value for the most recent quarter 1996 q2 is 5 6 percent the nairu has declined in recent years in response to global competition immigration other factors weakening labor s bargaining position and the rapidly declining prices of computers and other electronics

on the identification of cointegrated systems in small samples a modelling strategy with an application to uk wages and prices abstract this paper discusses the practical application of identification in cointegrated systems it will argue that in a common realistic modelling situation of a limited data set and the theory requirements of a fairly rich model the techniques proposed in the existing literature are almost impossible to implement successfully there are crucial decisions to be made over the order in which various restrictions are imposed in the move from a general unrestricted vector error correction model vecm to the fully over identified vecm we will argue that imposing exogeneity restrictions at the earliest possible stage of the model reduction process and then restricting the dynamic adjustment of the model hugely increases the power of tests of overidentifying restrictions on the long run cointegrating vectors in practice this means that a thorough use of economic theory at an early stage rather than treating a model as a pure statistical artefact can yield enormous benefits

enhancing excellence socially motivated private schools of nepal social motivation can promote efficiency of public service delivery though its role in providing schooling is little understood we provide both theoretical and empirical insights as to why not for profit private schools could enhance excellence in schooling using nepal as a case study results suggest that socially motivated trust schools outperform all other types of schools irrespective of whether we consider standardised test scores absolute or relative to school expenditure per student results are robust and highlight that trust school s social objective coupled with private financing ownership and management that minimises its agency costs is key to their value for money

finance is good for the poor but it depends where you live i examine whether or not the incomes of the poor systematically grow with average incomes and whether financial development enhances the incomes of the poorest quintile following the methodology of dollar and kraay 2002 i find once extending dollar and kraay s data their findings are robust to the lucas critique and economic growth is important for poverty reduction universally however in comparison to other authors work i show financial development aids the incomes of the poor in certain regions whilst it may be detrimental in others this proposes evidence against a one size fits all model adding a further contribution to the literature on financial development and poverty

legal environment finance channels and investment the east african example abstract how do legal environments and finance affect investments by firms in the east african community property rights external and internal finance channels key conduits of the transmission mechanism from legal environment to investment individually and interactively affect firms decision to invest firms that perceive secure property rights are more likely to invest in fixed capital the interactions suggest governments in this community would do well to pursue investment growth policies that slant heavily towards financial markets deepening while not ignoring enhancement of legal infrastructures overall property rights external finance internal finance firm size and an export orientation are important determinants of the investment decision

a new database on the structure and development of the financial sector this article introduces a new database of indicators of financial structure and financial development across countries and over time the database is unique in that it combines a wide variety of indicators that measure the size activity and efficiency of financial intermediaries and markets it improves on previous efforts by presenting data on the public share of commercial banks introducing indicators of the size and activity of nonbank financial institutions and constructing measures of the size of bond and primary equity markets this article introduces a new database the first to provide comprehensive measures of the development structure and performance of the financial sector this database is the first to define and construct indicators of the size and activity of nonbank financial intermediaries such as insurance companies pension funds and non deposit money banks it is also the first to include indicators of the size of primary equity markets and primary and secondary bond markets in constructing the database authors carefully deflate measures and match stock and flow variables

manufacturing growth and financial development evidence from oecd countries recent theoretical models conjecture that the development of the financial sector is essential for economic growth we investigate this hypothesis from a time series perspective and find that financial sector gdp is cointegrated for many oecd countries not so much with manufacturing gdp but mostly with manufacturing total factor productivity moreover this relation is in some instances characterized by long run causality in the sense of granger and lin however even within this homogeneous group of countries the variety of results suggests a more complex picture than is apparent from cross sectional evidence

heterogeneous borrowers liquidity and the search for credit abstract we develop a general equilibrium model of credit formation where borrowers and lenders must search for matches and where the composition of borrowers adjusts to satisfy equilibrium entry conditions when market liquidity dries up as a result of fundamental shocks to the system fewer borrowers will participate in the credit market with low quality borrowers suffering disproportionately because of a flight to quality however less liquid credit markets need not be associated with lower social output because the effect of higher average quality may outweigh that of reduced market participation depending crucially on the source of the liquidity shock

a re examination of financial development stock markets development and economic growth this study provides new evidence on the role of financial development and stock market development in accounting for economic growth across geographic regions and income groups to derive feasible policy implications we estimate not only unbalanced panel regressions with period fixed effects but also variance decompositions of annual gross domestic product gdp growth rates to examine what proxy measures are most important in economic growth over time and how much they contribute to economic growth we find distinct direction timing and strength of the causal links between financial development stock market development and economic growth based on the results of granger causality tests therefore it may be necessary to make different efforts to achieve steady economic growth across geographic regions and income groups

what is happening to the impact of financial deepening on economic growth i introduction among the strongest elements of the modern economists canon is that financial sector development has a significant impact on economic growth a generation ago economists like goldsmith 1969 1 and mckinnon 1973 began to draw attention to the benefits of financial structure development and financial liberalization by the early 1990s mckinnon 1991 12 could write with confidence that now however there is widespread agreement that flows of saving and investment should be voluntary and significantly decentralized in an open capital market at close to equilibrium interest rates since the 1990s a burgeoning empirical literature has illustrated the importance of financial sector development for economic growth despite the growing consensus however we find that the link between finance and growth in cross country panel data has weakened considerably over time at the very time that financial sector liberalization spread around the world the influence of financial sector development on economic growth has diminished the seminal empirical work that established the growth finance link is king and levine 1993 which extended the cross country framework introduced in barro 1991 by adding financial variables such as the ratios of liquid liabilities or claims on the private sector to gross domestic product gdp to the standard growth regression they found a robust positive and statistically significant relationship between initial financial conditions and subsequent growth in real per capita incomes for a cross section of about 80 countries in the subsequent decade numerous empirical studies expanded upon this using both cross country and panel data sets for the post 1960 period 2 in this paper we reexamine the core cross country panel result and find that the impact of financial deepening on growth is not as strong with more recent data as it appeared in the original panel studies with data for the period from 1960 to 1989 we consider various explanations for this clear shift first we suggest that financial deepening has a positive effect on growth if not done to excess rapid and excessive deepening as manifested in a credit boom can be problematic even in the most developed markets because it can both weaken the banking system and bring inflationary pressures we test this hypothesis by looking at the finance growth nexus among countries that have or have not experienced financial sector crises we find that once crisis episodes are removed the finance growth relationship remains intact its weakening over time thus seems to be a result of an increased incidence of crises in later years our second and related hypothesis is that the widespread liberalization of financial markets that occurred in the late 1980s and early 1990s made financial deepening less effective this is reminiscent of robert lucas s 1975 critique of econometric policy evaluation advanced three decades ago policies that have promoted and or forced increases in financial depth over the past two decades may have altered the basic structural relationship between finance and growth this could occur if the observed benefits of financial deepening led many countries to liberalize before the associated legal and regulatory institutions were sufficiently well developed as a consequence the impact of financial deepening on growth would become smaller our evidence does not indicate that recent liberalizations are responsible for the breakdown of the finance growth link however there may be an indirect link as premature financial development can lead to financial crises that have real effects third we examine the role of global equity markets that have grown in importance and prominence in the years over which the finance growth relationship disappeared however we do not find any evidence to suggest that equity market growth has substituted for the role of credit markets and banks in particular

determinants of opec production implications for opec behavior we estimate models that identify the economic and organizational determinants of crude oil production by individual opec nations to clarify the interpretation of econometric results we model production with specifications that resolve the statistical ordering of variables and estimate models with techniques that can cope with stochastic trends in the time series we also analyze the short run dynamics for asymmetries that may carry important insights about opec behavior results indicate that quotas are an important determinant of production and their effects generally are symmetric which implies that opec is an organization that influences production and ultimately prices real prices generally have a positive effect on production and the size of this effect may depend on spare capacity which implies that opec behaviors also embody competitive elements finally all nations other than saudi arabia show some form of production sharing behavior which may imply that opec shares mismatches between the call for opec production and opec quotas

the stock market monetary policy and economic development author affiliation edgar a ghossoub department of economics university of texas at san antonio san antonio tx 78249 usa e mail edgar ghossoub utsa edu robert r reed dagger department of economics finance and legal studies 200 alston hall university of alabama tuscaloosa al 35487 e mail rreed cba ua edu corresponding author acknowledgment we thank two anonymous referees and the co editor kent kimbrough for their insightful comments 1 introductiona vast amount of research in macroeconomics studies the role of financial markets for economic development for example king and levine 1993 document that active banking systems help economies achieve higher rates of growth 1 in addition to banking systems other measures of financial development are important notably levine and zervos 1998 conclude that stock market liquidity promotes activity 2 however minier 2003 identifies nonlinearities in the relationship between stock market activity and growth in particular minier concludes that there are threshold effects from financial development to economic performance beyond a threshold level of financial development growth and stock market activity are positively related however the correlation is not observed in countries with small stock markets consequently access to a stock market may result in a significant increase in economic activity or it may have little impact 3in addition to the stage of financial development monetary policy also affects the development process while initial studies indicate that inflation is generally associated with slower economic progress more recent research concludes that the effects of monetary policy vary across countries bae and ratti 2000 observe that higher rates of money growth are correlated with lower levels of output in argentina and brazil in contrast bullard and keating 1995 point out that inflation may be associated with an increase in output in low inflation countries in particular the recent work of ahmed and rogers 2000 finds evidence of a tobin effect for the united states 4 5why does the impact of financial development vary across countries furthermore why does the effect of monetary policy also differ across countries in this article we demonstrate that the impact of financial development depends on the services provided by various financial markets that is the economic functions of banks may be substantially different than stock markets although different types of financial markets fulfill unique allocative functions there has been surprisingly little attention devoted to studying the ways in which asset markets collectively interact from a general equilibrium perspective 6 furthermore previous work does not address how the role of monetary policy depends on the extent of financial market development we attempt to fill this gap by developing a monetary growth model that incorporates money bank deposits and equity 7 as in schreft and smith 1998 spatial separation and limited communication create a role for money and commercial banks in our economy young individuals are subject to random relocation shocks as money is the only asset that can cross locations relocated agents must liquidate all their asset holdings into currency thus random relocation is analogous to the liquidity preference shocks in diamond and dybvig 1983 as a result our model illustrates the risk pooling role of financial intermediaries in contrast to banks we consider that the stock market promotes economic development by establishing a market in which capital can be transferred across time for example this may reflect specialization of factor inputs to illustrate such ideas we consider the following motivation individuals in the economy have specialized production technologies

public debts and private assets explaining capital flight from sub saharan african countries we investigate the determinants of capital flight from 30 sub saharan african countries including 24 countries classified as severely indebted low income countries for the period 1970 1996 the econometric analysis reveals that external borrowing is positively and significantly related to capital flight suggesting that to a large extent capital flight is debt fueled we estimate that for every dollar of external borrowing in the region roughly 80 cents flowed back as capital flight in the same year capital flight also exhibits a high degree of persistence in the sense that past capital flight is correlated with current and future capital flight the growth rate differential between the african country and its oecd trading partners is negatively related to capital flight we also explore the effects of several other factors inflation fiscal policy indicators the interest rate differential exchange rate appreciation financial development and indicators of the political environment and governance we discuss the implications of the results for debt relief and for policies aimed at preventing capital flight and attracting private capital held abroad

professional accountancy organizations and stock market development this study investigates the relationship between the ethical educational and disciplinary development of professional accountancy organizations paos in a given country and the development of that country s stock market using a comprehensive measure based on the responses of the major paos in 36 countries to a questionnaire designed by the international federation of accountants to assess the development of paos internationally we find a significantly positive association between the development of paos and stock market development in addition we find the positive association between the development of paos and stock market development to be more pronounced in countries with higher levels of investor protection a stronger public enforcement environment or lower levels of corruption suggesting the importance of complementary institutions in the relationship between paos and stock market development we also find that better developed paos are associated with better quality financial reporting finally our result also shows that relative to the investigation and discipline mechanism and educational requirements imposed by paos the ethical development of a country s professional accountants appears to have the strongest positive association with a country s stock market development

financial integration productivity and capital accumulation understanding the mechanism through which nancial globalization aects eco nomic performance is crucial for evaluating the costs and bene ts of opening nancial markets this paper is a rst attempt at disentangling the eects of nancial inte gration on the two main determinants of economic performance productivity tfp and investment i provide empirical evidence from a sample of 70 countries observed between 1975 and 1999 the results for both de jure and de facto indicators suggest that nancial integration has a positive direct eect on productivity while it does not directly aect capital accumulation i also control for indirect eects of nancial globalization through nancial development and banking and currency crises while nancial integration does not systematically increase domestic nancial depth it may raise the likelyhood of banking crises though only to a minor extent yet the overall eect of nancial liberalization remains positive for productivity and negligible for investment

the inflationary effects of stochastic resource revenues in resource rich economies with less well developed financial markets this article develops a simple dynamic stochastic general equilibrium dsge model to illustrate how economies that face restrictions in their ability to alter both government spending and taxation in the short run and cannot borrow easily perhaps because of incomplete internal capital markets can find external fluctuations in resource revenues producing unexpected variations in their internal money supply and ultimately in their inflation rate the main channels for these effects run through the government budget and through the country s balance of payments position the model is calibrated to illustrate the case of iran

reassessing the law finance and growth nexus after the recent great recession abstract the paper provides a reassessment of the relationship between financial structure financial development and economic growth conducting cross section and panel econometric analyses for a sample of 62 countries over 1980 2016 in line with the traditional literature we confirm the existence of a positive cross country relationship between the legal system financial development and growth even including the experience of the recent great recession in addition when jointly assessing the effect of financial structure and financial development on growth it emerges that a more bank oriented economy enjoys higher benefits in terms of long run real gdp per capita growth than a market oriented one when we consider variations across countries and over time we find that both financial structure and financial development affect growth but in an opposite way as the cross section analysis in particular when we control for their joint effect on growth we observe a positive impact of market based financial systems and a negative impact of the overall financial development we also provide evidence of the existence of a positive and significant relationship between economic growth and shadow banking during the 2002 2016 period highlighting the crucial role played by non bank financial intermediation in complementing traditional banking and in affecting the real economy

financial development income inequality and the redistributive effects of monetary policy abstract how should financial systems be designed to limit income inequality does the redistributive impact of inflation depend on the extent of financial development should optimal monetary policy vary across countries with different levels of financial development in order to address these questions we develop a monetary growth production model with heterogeneous agents in our economy optimal policy needs to weigh the effects of policy across two groups capital owners and individuals who hold liquid assets in this environment we compare various economies that are identical in every aspect except for their level of financial development interestingly we generally find that economies at the highest stages of financial development economies in which money bonds and claims to capital are traded experience the highest amount of capital formation and social welfare as long as inflation is low yet regardless of the extent of financial development there are generally redistributive consequences from inflation moreover the model tends to predict that economies with relatively small stock markets produce the highest levels of income inequality empirical work examining the role of money growth and the implications of financial development across countries is consistent with predictions from the model

financial development and economic growth a meta analysis we analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth taken together the studies imply a positive and statistically significant effect but the individual estimates vary widely we find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results studies that do not address endogeneity tend to overstate the effect of finance on growth while the effect seems to be weaker in less developed countries the effect decreases worldwide after the 1980s our results also suggest that stock markets support faster economic growth than other financial intermediaries

stock markets corporate finance and economic growth during the past decade the capitalization of emerging markets increased twentyfold in 1994 trading on these markets accounted for about 17 percent of the 9 6 trillion of shares traded on the world s stock markets up from a mere 3 percent of the much smaller 1 6 trillion in 1985 this rapid growth in emerging stock market activity raises critical questions for developing country policymakers what effect do stock markets have on economic growth how does stock market development affect firms financing decision and if stock markets are good for growth what policies can governments adopt to foster their development this note summarizes answers to these questions drawn from a recent research project

same financial development yet different economic growth why we re study the relationship between financial development and real gdp per capita growth in 48 countries what we find is an interesting evidence that only stock market development has positive effects on growth and that banking development has an unfavorable if not negative effect on growth we examine whether or not these impacts are a product of various financial and economic conditional variables our conditional variables consist of financial liberalization two sets of country development dummies crises in banking and currency dummies the creditor protection index as well as the anti director and corruption indices our results clearly show that the conditional variables of financial liberalization high income level and good shareholder protection mitigate the negative impacts of banking development on growth in contrast the conditional variables of middle income level regional latin american sub saharan african and east asian dummies banking and currency crises good creditor protection and higher corruption strengthen the negative impacts of banking development on growth next the conditional variables of middle income level latin american sub saharan african and east asian dummies strengthen the positive impacts of stock market development on growth whereas the conditional variables of financial liberalization mitigate the positive impacts of stock market development on growth last we find that the relationship between growth and bank development is better described as a weak inverse ushape this inverse u shape becomes stronger when additional stock market variables are squared thus financial development and growth may in fact be in a nonlinear form

wage bargaining and the phillips curve the identification and specification of aggregate wage equations most economists believe that wage setting is very important for understanding macroeconomic behavior but the form of wage equations commonly estimated suffer from problems of identification the aim of this paper is to consider whether these problems are inevitable and if they are not to suggest ways in whi ch one can estimate structural models of wage setting it is argued that if one confines attention to models of wage bargaining t hat are commonly used identification of the parameters of wage setting should not be a problem and that the most appropriate form of an aggregate wage equation should be a phillips curve copyright 1993 by royal economic society

the evolution of financial intermediation evidence from 19th century ontario microdata microdata for ontario decedents in 1892 and 1902 is analyzed to help explain the dramatic growth of the canadian banking system in the late 19th century combining data from probate inventories with census data at the township level we find that the expansion of deposit banking happened at the extensive rather than intensive margin and was correlated with the expansion of the branch network of the banking system although we cannot assign causation wealth and urbanization help to explain the growth of deposit banking but the significance of a dummy variable for 1902 points to other time correlated factors such as innovations in transportation and financial innovations that lowered costs and facilitated access to banking services resume l evolution de l intermediation financiere resultats a partir de micro donnees pour l ontario au 19e siecle les auteurs analysent les micro donnees pour les personnes decedees en ontario en 1892 et en 1902 pour tenter d expliquer la croissance dramatique du systeme bancaire canadien a la fin du 19 siecle en combinant des donnees provenant d inventaires apres deces avec celles de recensements au niveau des cantons on decouvre que l expansion du systeme bancaire va se produire a la marge extensive plutot qu a la marge intensive et etre co reliee a l expansion du reseau de succursales du systeme bancaire encore qu on ne puisse assigner un lien de causalite richesse et urbanisation aident a expliquer la croissance des banques de depots mais la signification de la variable fictive pour 1902 pointe vers des facteurs comme l innovation dans le transport et l innovation financiere qui ont reduit les couts et facilite l acces aux services bancaires

do natural resource revenues hinder financial development the role of political institutions we hypothesize that natural resource revenues may deteriorate contract enforcement if political institutions are weak as poor contract enforcement leads to low financial development resource revenues may hinder financial development in countries with poor political institutions but not in countries with comparatively better political institutions we provide empirical support for this hypothesis based on within country variation in our sample covering the period 1970 2005 and 133 countries our results are robust to the use of additional control variables different samples and alternative measures of financial development and political institutions

financial development and energy consumption in central and eastern european frontier economies this study examines the impact of financial development on energy consumption in a sample of 9 central and eastern european frontier economies several different measures of financial development are examined including bank related variables and stock market variables the empirical results obtained from dynamic panel demand models show a positive and statistically significant relationship between financial development and energy consumption when financial development is measured using banking variables like deposit money bank assets to gdp financial system deposits to gdp or liquid liabilities to gdp of the three stock market variables investigated only one stock market turnover has a positive and statistically significant impact on energy consumption both short run and long run elasticities are presented the implications of these results for energy policy are discussed

seeing like the fed culture cognition and framing in the failure to anticipate the financial crisis of 2008 one of the puzzles about the financial crisis of 2008 is why regulators particularly the federal open market committee fomc were so slow to recognize the impending collapse of the financial sys

deposit insurance around the world in the past two decades in a series of banking crises around the world banks have become systematically insolvent these crises have occurred in developed and developing economies alike to make such financial system breakdowns less likely and to limit their costs if they occur policymakers feel the need for financial safety nets these include such policies as implicit or explicit deposit insurance a lender of last resort function of the central bank bank insolvency resolution procedures and bank regulation and supervision of these policies explicit deposit insurance has been gaining popularity in recent years since the 1980s the number of countries with explicit deposit insurance schemes almost tripled with most oecd countries and an increasing number of developing economies adopting some form of explicit depositor protection in 1994 deposit insurance became the standard for the newly created single banking market of the european union establishing an explicit deposit insurance scheme became part of the generally accepted best practice advice given to developing economies

the impact of financial development on energy consumption in emerging economies abstract financial development is often cited as a very important driver of economic growth in emerging economies and it is thus likely that financial development affects energy demand this study uses generalized method of moments estimation techniques to examine the impact of financial development on energy consumption in a sample of emerging countries several different measures of financial development are examined using a panel data set on 22 emerging countries covering the period 1990 2006 the empirical results show a positive and statistically significant relationship between financial development and energy consumption when financial development is measured using stock market variables like stock market capitalization to gdp stock market value traded to gdp and stock market turnover the implications of these results for energy policy are discussed

the impact of banking and fiscal policies on state level economic growth this paper investigates the hypothesis that economic growth is affected by banking structure and fiscal policies we use data from the 48 contiguous states for the period 1950 1980 aggregated into six five year time periods primarily to test the effect of the following factors on growth of state per capita income i restrictions over branch banking ii restrictions over multibank holding companies iii the depth of financial assets in a state iv the financialintermediary mix v the size of state government and vi the methods of financing state government we find no support for the hypotheses that branch banking or multibank holding company restrictions affect growth however financial depth and the mix of financial intermediaries are strongly correlated with economic growth finally the state fiscal policy variables had no significant effect on income growth

the real effect of banking crises finance or asset allocation effects some international evidence abstract this paper analyzes whether the decline in economic growth that follows a banking crisis occurs because of a reduction in the amount of credit available finance effect or a worsening in the allocation of investable resources asset allocation effect we use a sample of more than 2500 industrial firms in 18 developed and developing countries that experienced 19 systemic banking crises between 1989 and 2007 the results indicate that banking crises negatively affect firms intangible investments which intensifies the economic downturn the negative growth effect produced by the worsening of the investment allocation is stronger in countries with highly developed financial systems and institutions

are there efficiency gains from the removal of natural resource export restrictions evidence from british columbia log export bans lebs are a popular development tool utilised by developing nations with sizable endowments of timber however the actual impact of these policies is debatable british columbia has a developed forestry sector and still maintains a leb this trade restriction continually creates conflicts with canada s international trade partners including the united states this paper examines the efficiency implications of a hypothetical removal of roundwood export restrictions in british columbia using roundwood price and quantity data from 1995 to 2008 a time series econometric approach is utilised to determine supply and demand elasticities for british columbia s roundwood empirical results from a vector error correction model suggest that a removal of export restrictions will generate an overall increase of approximately 347 91 million us dollars per year to british columbia s forest economy

who gains from non collusive corruption non collusive corruption i e corruption that imposes an additional burden on business activity is particularly widespread in low income countries we build a macroeconomic model with credit market imperfections and heterogeneous agents to explore the roots and consequences of this type of corruption we find that credit market imperfections by generating rents for the incumbent entrepreneurs create strong incentives for corrupt behavior by state officials however non collusive corruption not only redistributes income from non officials towards officials but also within the group of potential entrepreneurs if borrowing is limited bribes prevent poorer but talented individuals from starting a business but this is likely to benefit those who may enter anyway the cost of capital is lower and there is less competition on the goods markets

when complexity meets finance a contribution to the study of the macroeconomic effects of complex financial systems in the last decade complexity economics has emerged as a powerful approach to the understanding of the most relevant factors influencing economic development the concept of economic complexity has been applied to the study of different economic issues such as economic growth technological change and inequality with this work we aim at extending the application of this concept to the study of the financial side of the economy and in particular of the macroeconomic effects of rising financial complexity in this paper we present an agent based model integrating an increasingly complex financial sector with a real side of the economy populated among other sectors by heterogeneous households we test the systemic impact that the increasing complexity of both the financial system and the financial products it manufactures bear on economic growth macroeconomic stability and inequality we find mixed results with respect to the positive economic implications the existing literature ascribes to products complexity and deepening production capabilities despite higher financial complexity may lead to faster growth our model suggests that this comes at the cost of heightened financial fragility a more crisis prone economic system and increasing levels of income and wealth inequality according to these findings and consistently with pioneering insights from minsky we claim that rising complexity does not always entail positive consequences for the well being of the economy this is particularly true when it comes to financial innovations and financial complexity

financial determinants of domestic investment in sub saharan africa evidence from panel data abstract this study investigates the effects of financial development on domestic investment in a sample of 30 sub saharan african countries it is based on a dynamic serial correlation investment model including various indicators of financial development controlling for country specific fixed effects and nonfinancial factors of investment the results indicate a positive relationship between domestic investment total investment and private investment and various indicators of financial development higher financial development leads to higher future levels of investment implying a potent long run effect of financial development on domestic investment the findings imply that financial development can stimulate economic growth through capital accumulation

public debt and financial development abstract we examine the role of public debt in financial development the literature has highlighted its supportive role through providing collateral and benchmark we contrast this safe asset view to a lazy banks view developing banking sectors that lend mainly to the public sector may develop more slowly because it could make banks profitable but inefficient results from country level and bank level regressions are more supportive of the lazy banks view but the safe asset view seems to play a role at moderate levels of public debt held by banks there is also evidence of a harmful interaction between public debt and financial repression

corruption in bank lending to firms cross country micro evidence on the beneficial role of competition and information sharing abstract building on the important study by beck demirguc kunt and levine 2006 bank supervision and corruption in lending journal of monetary economics 53 2131 2163 we examine the effects of both borrower and lender competition as well as information sharing via credit bureaus registries on corruption in bank lending using the unique world bank data set wbes covering more than 4 000 firms across 56 countries with information on credit bureaus registries assembled by djankov mcliesh and shleifer 2007 private credit in 129 countries journal of financial economics 84 299 329 and bank regulation data collected by barth caprio and levine 2006 rethinking bank regulation till angels govern cambridge university press new york to measure bank competition and information sharing we find strong evidence that both banking competition and information sharing reduce lending corruption and that information sharing also helps enhance the positive effect of competition in curtailing lending corruption we also find that the ownership structure of firms and banks legal environment and firm competition all exert significant impacts on lending corruption

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

democracy volatility and economic development growth stability is an important objective because development requires sustained increases in income because volatility is costly for the poor and because volatility deters growth we study the determinants of average growth and its volatility as a two equation system and find that higher levels of democracy and diversification lower volatility whereas volatility itself reduces growth muslim countries instrument for democracy and measures of diversification identify volatility in contrast to the lack of consensus on the democracy growth relationship the democracy stability link is robust rather than focus on growth this paper forges an alternative link between democracy and development through the volatility channel

economic growth and institutions some sensitivity analyses 1961 2000 do institutions help explain macroeconomic performance this article addresses two issues first especially given the practical implications of the literature measurement of institutions should avoid tautologies and therefore this study uses econometrics to estimate the effect of objectively measurable institutions such as labor market organization financial development fiscal federalism and political regime type second the growing literature on these promising factors in turn is unfortunately incommensurable because previous studies fail to control for other institutional and in some cases standard economic variables given data on up to ninety four countries from 1961 through 2000 extreme bound analysis eba an econometric technique that addresses the sensitivity of previous findings to alternative assumptions about model specification suggests that some institutions associated with the organization of labor and capital are robust correlates of investment few data support the view that variables related to the organization of the state including fiscal federalism and political regime type affect macroeconomic performance without implication the author thanks richard nelson doug chalmers robert shapiro alessandra casella brendan o flaherty geoffrey garrett alexander hicks brett hammond mark kesselman the editor lisa martin and two anonymous referees for helpful comments also ross levine peter rousseau geoffrey garrett and torben iversen were very helpful in locating data the views expressed in this article do not necessarily reflect those of the board of governors of the federal reserve system or any member of its staff

finance and income inequality in kazakhstan evidence since transition with policy suggestions abstractkazakhstan gained independence in 1990 and has undergone significant changes in economic social and trade conditions since then we analyse the effects of financial development on income inequality in kazakhstan incorporating economic growth foreign investment education and the role of democracy as the drivers we establish that income inequality in kazakhstan is impaired by financial development in summary we send three messages for policy purposes first strengthening financial sector is necessary to close the gap between haves and have nots second attracting fdi beyond the hydrocarbon sector is necessary to alleviate inequality finally adaptation of education system to the new social and economic environment would help in improving income distribution

airfares and oil prices feathers and rockets adjustments abstract one reason that the us department of justice is examining collusion within the airline industry may be the small 12 decline in airfares that follows a large 57 drop in crude oil prices this relatively small response could be caused by three mechanisms related to the oil market 1 slow rates of adjustment 2 airfares adjust asymmetrically to changes in the oil market or 3 asymmetric adjustments within the oil market that are communicated symmetrically to airfares i evaluate these hypotheses by estimating a cointegrating vector autoregression model from monthly data and testing the error correction mechanism for asymmetry although small estimated rates of adjustment indicate that the large reduction in oil prices has been passed to airfares tests of the error correction model do not provide evidence for asymmetric adjustments between airfares and oil market contrary to the relation between crude oil and motor gasoline prices prices for jet fuel adjust faster to reductions in crude oil prices and so cannot be responsible for the relatively small decline in airfares although the cvar model does not identify an oil related mechanism that can generate the small decline in airfares relative to the large decline in the price for crude oil this absence does not imply the converse that airlines collude to set airfares

the role of trader positions in spot and futures prices for wti abstract we extend the analysis of causal relations between trader positions and oil prices and the process of price discovery by estimating a cointegrating vector autoregression cvar model that expands the cash and carry relation between spot and futures prices to quantify long and short run relations among oil prices trader positions interest rates and oil inventories results indicate that oil inventories and trader positions are needed to generate cointegration between spot and futures prices the presence of trader positions and oil inventories suggest that both play a role in price discovery furthermore the cointegrating relation for price loads into the equation for both oil prices and trader positions this suggests a bi directional simultaneous adjustment process between oil prices and trader positions this expands the unidirectional causal relation from oil prices to trader positions that is generated by previous studies additional results suggest that price discovery occurs in the market for heavily traded near month futures contracts but discovery for thin far month futures markets occurs in the spot market together these results suggest mechanisms by which speculation could affect oil prices but the results presented here are moot regarding their effects

does financial agglomeration promote the increase of energy efficiency in china abstract whether financial agglomeration is conducive to the improvement of energy efficiency is of great significance for china to better follow the path of energy conservation and emission reduction and green sustainable development based on the balanced panel data of 285 cities in china from 2005 to 2017 this paper analyzes the impact of financial agglomeration on energy efficiency theoretical analysis shows that financial agglomeration can influence energy efficiency through scale economy effect innovation driving effect information spillover effect and structural adjustment effect dynamic spatial econometric results show that from a national perspective financial agglomeration has a positive impact on energy efficiency however from the perspective of different regions and different city sizes it is found that financial agglomeration can have different effects on energy efficiency financial agglomeration has a significant positive impact on energy efficiency in eastern and central regions megacities and big cities financial agglomeration has a significant negative impact on energy efficiency in western china and has no significant effect on energy efficiency in medium sized and small cities finally based on the conclusions of the study specific proposals for financial agglomeration to improve energy efficiency are proposed

a unified framework for analysing price interdependence innovative activity and exchange rate pass through this paper develops an international oligopoly model in which domestic and foreign firms simultaneously choose their price and innovation strategies under the assumption of non zero conjectural variations in relation to their competitors price changes the model captures the links between the exchange rate foreign and domestic firms prices and investment in process innovation and provides a unified framework for analysing exchange rate pass through

coordination failures and government policy evidence from emerging countries rodrik jie 1996 argues for coordinated government policy when emerging countries are stuck in a low wage equilibrium because of a coordination failure because the return to intermediate output is markedly below that realised when a minimum threshold number of varieties must produced in concert the expectation of too few varieties is sufficient to discourage entry and keep a high tech sector from succeeding here we search for evidence consist with such threshold models on cross country data first production data is used to ask i whether evidence of coordination failures among intermediate good producers is associated with a low wage equilibrium and ii whether government policy can succeed in moving an emerging country from a low to high wage equilibrium second financial data is used to ask whether there is evidence that government coordination can replace missing private markets in emerging economies and whether a moderate degree of financial repression can help rather than hinder growth

incomplete markets labor supply and capital accumulation we explore the accumulation of capital in the presence of limited insurance against idiosyncratic shocks borrowing constraints and endogenous labor supply in the exogenous labor supply case e g aiyagari 1994 huggett 1997 the presence of limited insurance increases the demand for savings for precautionary reasons as a consequence capital and output are higher under incomplete markets we show that if labor hours are endogenous labor supply is likely to be lower under incomplete markets because those agents who experience a high shock to productivity are ex post richer and they work fewer hours in some cases this wealth effect can overcome the aggregate precautionary savings and give rise to lower savings and output under incomplete

financial structure corporate savings and current account imbalances abstract we explore the effects of a country s financial structure on its corporate savings and current account a financial system that relies relatively more on banks and less on the capital market presents more difficulties for small and medium sized enterprises to access external finance these firms find it necessary to accumulate more savings on their own as a result countries that have a less developed capital market are more likely to run current account surpluses or smaller current account deficits using panel data of 66 countries for the period 1990 2007 we find consistent and robust evidence in favor of this hypothesis further explorations based on firm level data reveal that firms especially smaller firms in economies with relatively underdeveloped capital markets do save significantly more than their counterparts in countries with relatively more developed capital markets

the effects of capital controls on international capital flows in the presence of asymmetric information abstract this paper examines the effects of capital controls on the volume and composition of international capital flows in the presence of asymmetric information in the two period small open economy model stochastic second period output depends on the level of first period investment which cannot be verified by international investors domestic agents obtain external funding by borrowing on international capital markets and by selling equity to international investors the paper investigates the effects of various capital controls on the debt equity choice domestic investment and welfare controls on capital inflows are shown to shift the composition of flows from fixed income instruments towards equity and to reduce the overall volume of inflows

oil demand shocks reconsidered a cointegrated vector autoregression abstract we reconsider the conclusions about the importance of oil demand shocks and the unimportance of supply shocks reported by kilian 2009 we investigate whether the proxy for worldwide real economic activity dry bulk maritime freight costs represents anything more than transportation costs by analyzing the relation between these costs and oil prices the meaning of this variable is critical because transportation costs appear on both sides of the equations estimated by kilian directly as dry bulk maritime freight costs and as part of the measure for oil prices we also investigate the effects of representing oil supply with an aggregate of opec and non opec production because they likely use different criteria to chose output finally we investigate kilian s use of the first difference of supply while the other variables in his model are represented as levels the results suggest that opec and nonopec nations use different criteria to set output and that reductions increases in opec production raise lower oil prices the elements of the cointegrating relations their loadings and impulse response functions suggest that the positive relation between dry bulk maritime freight costs and oil prices simply represents the effect of higher oil prices on transportation costs sensitivity analyses suggest that these differences are caused by including transportation costs in the measure of oil prices aggregating opec and non opec productions and using a very long lag length to estimate the var together these results suggest that conclusions about the importance of demand shocks and the unimportance of supply shocks are not robust to alternative specifications that are consistent with many empirical findings about the world oil market

waves of international banking integration a tale of regional differences abstract we propose an original measure of international banking integration based on gravity equations and a spline function on a panel of 14 countries and their 186 partners between 1999 and 2012 contrary to the conventional wisdom we uncover that 1 the international banking integration outside the euro area has been tenaciously increasing since 1999 and has even strengthened after the crisis 2 in contrast the international banking integration of the euro area has been cyclical since 1999 with a peak in 2006 and a complete reversal since then 3 this decline is not a correction of previous overshooting but a marked disintegration 4 outside the euro area the level of income does not affect the shape of banking integration

integration and competition in the european financial markets abstract financial integration in europe should affect the competition between markets and intermediaries and generate a convergence of both interest rates and margins among different countries this paper analyzes both the evolution of the convergence in interest rates and the level of competition and its inequalities among the european banking systems for the period 1993 2001 the inequality index used the theil index allows us to break down the inequalities into a country and a specialization effect if the former effect dominates it would mean that national banking markets are segmented due to the existence of obstacles or barriers to integration on the other hand dominance of the latter effect would be related to the different level of competition depending on the type of banking specialization

law and finance at the origin what are the key determinants of financial development and growth a large literature debates the relative importance of countries legal and political environment in this paper i present evidence from ancient rome where an early form of shareholder company the societas publicanorum developed i show that the societas publicano rum flourished in a legally underdeveloped but politically supportive environment roman republic and disappeared when roman law reached its height of legal sophistication but the political environment grew less supportive roman empire in the roman case legal development appears to have mattered little as long as the law as practiced was flexible and adapted to economic needs the law as practiced in turn reflected prevalent political interests after discussing parallels in more recent history i provide a brief overview of the literature on law and finance and on politics and finance the historical evidence suggests that legal systems may be less of a technological constraint for growth than previously thought at least at the origin

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

does economic structure determine financial structure abstract in this paper we examine the relationship between the structure of the real economy and a country s financial system we consider whether the development of the real economic structure can predict the direction of evolution of a country s financial structure using data for 108 countries we find a significant relationship between real economic structure and financial structure next we exploit shocks to the economies in india finland and sweden and south korea and show that changes in the economic structure of a country influence the evolution of its financial system this suggests that financial institutions and capital markets change in response to the structure of industries

what makes growth sustained abstract we identify structural breaks in economic growth in 140 countries and use these to define growth spells periods of high growth preceded by an upbreak and ending either with a downbreak or with the end of the sample growth spells tend to be shorter in african and latin american countries than elsewhere we find evidence that growth duration is positively related to the degree of equality of the income distribution democratic institutions export orientation with higher propensities to export manufactures greater openness to fdi and avoidance of exchange rate overvaluation favorable for duration and macroeconomic stability

credit to government and banking sector performance abstract the impact of credit to government on three aspects of banking sector performance its deepening over time profitability and efficiency is examined for 142 countries country regressions suggest a sizeable negative effect of credit to government on bank deepening in developing countries but no impact in advanced economies bank regressions find that credit to government raises the profitability but reduces the efficiency of banks in developing countries in advanced economies there appears to be no impact on profitability but a positive one on efficiency

only income diverges a neoclassical anomaly the neoclassical growth model ngm is only consistent with the absolute divergence in output levels we observe if some determinants of steady state income are also diverging in this paper we show that accumulation rates of physical and human capital are actually significantly converging as are openness to trade and several variables measuring institutional quality output divergence in the face of input policy and institutional convergence is a deep anomaly for the ngm

can good governance lower bank intermediation costs this paper argues that better governance practices can reduce the costs risks and uncertainty of financial intermediation our sample covers 100 high middle and low income countries during 1996

bank based versus market based financial systems a growth theoretic analysis abstract we study bank based and market based financial systems in an endogenous growth model lending to firms is fraught with moral hazard as owner managers may reduce investment profitability to enjoy private benefits bank monitoring partially resolves the agency problem while market finance is more hands off a bank based or market based system emerges from firm financing choices neither system is unequivocally better for growth which crucially depends on the efficiency of financial and legal institutions but a bank based system outperforms a market based one along other dimensions investment and per capita income are higher and income inequality lower under a bank based system bank based systems are also more conducive for broad based industrialization

is the relationship between financial development and economic growth monotonic evidence from a sample of middle income countries summary we revisit the relationship between financial development and economic growth in a panel of 52 middle income countries over the 1980 2008 period using pooled mean group estimations in a dynamic heterogeneous panel setting we show that there is an inverted u shaped relationship between finance and growth in the long run in the short run the relationship is insignificant this suggests that too much finance can exert a negative influence on growth in middle income countries the finding of a non monotonic effect of financial development on growth is confirmed by estimating a threshold model

are financial development and trade openness complements or substitutes this article studies the long and short run relationships between financial development and trade openness using the pooled mean group estimator of pesaran shin and smith 1999 for unbalanced panel data for 87 countries over the 1960 2005 period our empirical results indicate that long run complementarity between financial development and trade openness coexists with short run substitutionarity between the two policy variables but when splitting the data into oecd and non oecd country groups this finding can be observed only in non oecd countries for oecd countries financial development has negligible effects on trade in addition we find nonlinearity in the relationship in that long run responses of trade decrease with financial development the article further finds coexistence of negative trade effects of financial fragility and positive trade impacts of financial depth

do household energy expenditures affect mortgage delinquency rates we postulate a direct role for energy prices in the 2008 financial crisis rising energy prices constrain consumer budgets and thereby raise mortgage delinquency rates this hypothesis is tested by estimating a quarterly cointegrating vector autoregressive cvar model that seeks to quantify the factors that influence the percentage of us mortgages that are 30 to 89 days past due and those that enter foreclosure results identify a long run relationship for the percentage of us mortgages that are 30 to 89 days past due that includes the interest rate on one year adjustable mortgages household expenditures on energy nominal home prices rates of home ownership and the fraction of mortgages 90 days or more past due that enter foreclosure unemployment rates have a short run effect together these variables account for much of the historical variation in the percentage of us mortgages that are 30 to 89 days past due and indicate that the post 2006 rise in this measure of mortgage delinquency is associated with falling home prices an increase in household expenditures on energy and rising unemployment

inflation thresholds and the finance growth nexus abstract the robustness of the cross sectional relationship between the size of a country s financial sector and its rate of economic growth is by now well established in this article we examine whether the strength of this relationship varies with the inflation rate using five year averages of standard measures of financial development inflation and growth for 84 countries from 1960 to 1995 a series of rolling panel regressions show that there is an inflation threshold for the finance growth relationship that lies between 13 and 25 percent when inflation exceeds the threshold finance ceases to increase economic growth we also find that the level of financial depth varies inversely with inflation in low inflation environments and that disinflation is associated with a positive effect of financial depth on growth

finance and trade a cross country empirical analysis on the impact of financial development and asset tangibility on international trade summary this paper investigates the interplay between financial development asset tangibility and international trade using industry level data on firms dependence on external finance and firms asset tangibility for 27 industries in 42 countries we find that economies with higher levels of financial development have higher export shares and trade balance in industries with more intangible assets using the same dataset we also show that the interplay between property rights protection and asset tangibility influences the pattern of trade higher levels of property rights protection lead to higher export shares and trade balance in industries with more intangible assets

banks and regional development an empirical analysis on the determinants of credit availability in brazilian regions crocco m faria silva f paulo rezende l and rodriguez fuentes c j banks and regional development an empirical analysis on the determinants of credit availability in brazilian regions regional studies this paper studies the influence that liquidity preference and bank lending strategies might have played in the determination of bank credit availability in brazilian regions during the period 1999 2008 it puts forward the argument that in remoter and less developed regions the liquidity preference of agents is higher and fluctuates along business cycles reducing regional credit availability in downturns due to both a contraction in supply and the demand for credit in remoter regions and producing a more unstable pattern for credit availability alongside business cycles empirical evidence for the brazilian regions during the period 1999 2008 is provided to support this view

delegated monitors large and small germany s banking system 1800 1914 banks play a greater role in the german financial system than in those of the united states or britain germany s large universal banks are admired by those who advocate bank deregulation in the united states others admire the universal banks for their supposed role in corporate governance and industrial finance many discussions distort the german banking system by overstressing one of several types of banks and ignore the competition and cooperation between the famous universal banks and other banking groups tracing the historical development of the german banking system from the early nineteenth century places the large universal banks in context

capital structure decisions during a firm s life cycle the study reported here examines the financing choices of small and medium sized firms i e those most vulnerable to information and incentive problems through the lens of the business life cycle we argue that the controversy in the empirical literature regarding the determinants of capital structure decisions is based on a failure to take into account the different degrees of information opacity and consequently firms characteristics and needs at specific stages of their life cycles the results show that in a bank oriented country firms tend to adopt specific financing strategies and a different hierarchy of financial decision making as they progress through the phases of their business life cycle contrary to conventional wisdom debt is shown to be fundamental to business activities in the early stages representing the first choice by contrast in the maturity stage firms re balance their capital structure gradually substituting debt for internal capital and for firms that have consolidated their business the pecking order theory shows a high degree of application this financial life cycle pattern seems to be homogeneous for different industries and consistent over time

historical origins of firm ownership structure the persistent effects of the african slave trade this paper uses evidence from the historical african slave trade to extend prior theory linking modern firm ownership structure to institutions and social capital we argue that institutions and so

endogenous market incompleteness with investment risks abstract this paper studies a general equilibrium economy in which agents have the ability to invest in a risky technology the investment risk cannot be fully insured with optimal contracts because shocks are private information we show that the presence of investment risks lead to under accumulation of capital relative to an economy where idiosyncratic shocks can be fully insured we also show that the availability of state contingent optimal contracts compared to simple debt contracts brings the aggregate stock of capital close to the complete markets level institutional reforms that make possible the use of these contracts have important welfare consequences

comovement information production and the business cycle abstract recent theoretical research suggests that information production is a positive externality of aggregate economic activity veldkamp 2005 both the quantity and quality of information increase during periods of economic expansion and decrease during periods of contraction based on this insight we hypothesize and confirm that time varying information production drives the comovement patterns observed in stock returns we examine stock return comovement in 36 countries from 1980 to 2007 and show that consistent with the theory comovement patterns are countercyclical that is when information production is high low comovement is low high we also find that the relation between comovement and the business cycle is stronger in countries that experience large intertemporal swings in information production finally we show that the relation between business cycle and comovement is stronger in poor countries countries with less developed financial markets and countries with weaker accounting and transparency standards these results suggest that financial development and transparency are conducive to a steady flow of financial information over the business cycle

the persistence of profits in banking an international comparison this article examines the dynamics of bank profitability in the usa germany great britain france italy and switzerland over the period 1993 2014 we find long run bank profit persistence in all six countries in the period before the financial crisis in 2008 banks with large capital ratios are persistently more profitable and there is little evidence of a link between bank size and the persistence of bank profits commercial saving banks are persistently more less profitable in four of the six countries the effects of the financial crisis in 2008 differed dramatically across countries as well as across ownership types while us banks experienced dramatic declines in the immediate aftermath of the crisis they recovered much faster than their european counterparts and essentially retain their long run profit potential by the year 2014

the growth effects of property rights the role of finance summary using a variety of statistical approaches we show that the relationship between property rights and growth is nonlinear stronger enforcement of property rights raises growth up to a point before growth begins to decline we provide a simple theoretical rationale for this conclusion using a model with informational asymmetries in the financial sector stronger property rights have two opposing effects on the one hand it increases capital formation and growth on the other hand it encourages bad borrowing practices thus there exists an optimal level of property rights which maximizes growth however as financial markets mature the negative effects associated with stronger property rights become weaker

services sector and economic growth in india this study examines the long run equilibrium and short run dynamic relationship between services sector and gross domestic product gdp and between services and nonservices sectors in india the model is estimated using the optimal single equation and the maximum likelihood system estimators all the estimators consistently suggest the cointegrating relationship between services sector and gdp as well as between services and nonservices sectors the estimates of long run elasticity parameters are statistically significant and dimensionally consistent across the estimators the conventional cumulative sum cusum and the new cusum and moving sum mosum tests suggest the stability of the equilibrium residuals and reinforce the cointegrating relationship between the model series the error correction model provides some support for unidirectional granger causality from services sector to gdp the impulse response and variance decomposition analyses instead suggest the bidirectional causality between servic