Cream Skimming in Financial Markets

Bolton, Patrick; Santos, Tano; Scheinkman, José A.

doi:10.2139/ssrn.1770065

Cited by 32 publications

(39 citation statements)

References 28 publications

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“…The theory states that the creation of modern financial institutions and products is principally a response to the demand for these institutions and products by savers and investors in the real sector, thus the financial sector follows the real sectors by adapting to the demands of the real sector rather than dictating the pace for the real sector to follow (Bolton, Santos, & Scheinkman, 2011;Gennaioli, Shleifer, & Vishny, 2012;Gurley & Shaw, 1967;Patrick, 1966;Stiglitz, 1994).…”

Section: Finance-growth Nexusmentioning

confidence: 99%

Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach

Lawal

Nwanji

Asaleye

et al. 2016

Cogent Economics & Finance

102

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For over a decade now, various efforts have been put in place by various governments of the developing economies to promote economic growth, financial development and expand trade with mixed results. The ability of financial development and/or trade openness to influence economic growth in the developing economies has been a subject of hot debate and remains inconclusive. While a number of scholars are of the view that compelling cointegration exists among each of these constructs, another set of substantial authors have documented that economic growth, trade openness and financial development do evolve independent of each other. Drawing from four financial developments-growth nexus theories, this study used the ARDL bound estimation techniques to examine the existence of cointegration among economic growth, financial development and trade openness in Nigeria. We intend to know what policy instruments need to be manipulated so as to achieve economic growth and financial stability. Our results show that a two-way cointegration exists between economic growth and financial development, on the one hand, as well as between economic growth and trade openness, on the other hand. We therefore recommend that in order to achieve economic growth, policymakers should pursue strong financial development and increase trade openness.

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Section: Finance-growth Nexusmentioning

confidence: 99%

Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach

Lawal

Nwanji

Asaleye

et al. 2016

Cogent Economics & Finance

102

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“…Axelson and Bond (2015) study a model in which the threat of moral hazard is associated with high wages and rents in …nance. Closely related, Bolton, Santos, and Scheinkman (2011) and Biais and Landier (2015) study models in which more opaque activities are related to higher informational rent extraction. 6 Acharya, Pagano, and Volpin (2013) study a model in which an increase in …rm-to-…rm mobility make employers provide excessive short term compensation, while the employees take excessive long term risk.…”

Section: Introductionmentioning

confidence: 99%

Wages and Human Capital in Finance: International Evidence, 1970-2005

Boustanifar¹,

Grant²,

Reshef³

2016

gwp

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We study the allocation and compensation of human capital in the finance industry in a set of developed economies in 1970-2005. Finance relative skill intensity and skilled wages generally increase but not in all countries, and to varying degrees. Skilled wages in finance account for 36% of increases in overall skill premia, although finance only accounts for 5.4% of skilled private sector employment, on average. Financial deregulation, financial globalization and bank concentration are the most important factors driving wages in finance. Differential investment in information and communication technology does not have causal explanatory power. High finance wages attract skilled international immigration to finance, raising concerns for "brain drain".

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“…This is the point: if the financial sector grows faster than the real one, then a reallocation of the production factors happens, predominantly labor, from the real sector to the financial one. As the real sector faces the deficit of the labor supply, especially the one with the highest level of human capital, this reallocation slows down the economic growth due to the smaller utilization of the production factors in the real sector (Bolton et al, 2011). Nonetheless, this finding is not unconditionally true.…”

Section: Begović Bmentioning

confidence: 99%

“…Reč je o sledećem: ukoliko finansijski sektor raste brže od realnog, tada dolazi do realokacije proizvodnih faktora, pre svega radne snage, iz realnog sektora u finansijski. Ovakva realokacija, budući da se realni sektor suočava sa nestašicom radne snage, pogotovo one koja poseduje najviši nivo ljudskog kapitala, dovodi do usporavanja privrednog rasta usled manjeg angažovanja proizvodnih faktora u tom sektoru (Bolton et al, 2011). Međutim, navedeni stav nikako nije bezuslovno tačan.…”

Section: Begović Bunclassified

Financial intermediation and economic growth: Is there a great alternative?

Begović¹

2017

Bankarstvo

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RezimeCilj ovog rada je da odgovori na pitanje da li postoji velika, fundamentalna alternativa postojećem načinu finansijskog posredovanja koja može da ubrza privredni rast. Pokazalo se da ne postoji velika kontroverza u pogledu uzročno-posledične veze kojom finansijsko posredovanje pospešuje privredni rast. Pokazalo se da regulacija treba da bude ex ante, sa unapred definisanim pravilima, da bude selektivna, usredsređena na finansijske institucije koje stvaraju najveći rizik, ali i da bude jednostavna, kako bi se lako ustanovili da li ispunjeni regulatorni zahtevi. Nove ideje u tom pogledu usmerene su ka umanjivanju leveridža, što vodi umanjenju kreditnog potencijala, ali i povećanju stabilnosti sistema. Male i srednje razvijene zemlje ne treba da budu inovativne na planu regulacije finansijskog sektora, već da pažljivo prate razvoj regulatornih instrumenata u svetu. Velika, fundamentalna alternativa postojećem načinu finansijskog posredovanja koja može da ubrza privredni rast ne postoji Ključne reči: finansijsko posredovanje, finansijski sistem, privredni rast, regulacija, bankarski sistem JEL: G20, G21, G28, O42 Primljen: 25.01.2017. Prihvaćen: 06.02.2017 SummaryThe aim of the paper is to explore whether there is a fundamental alternative to the incumbent pattern of financial intermediation that could accelerate the economic growth. It was demonstrated that there was no substantial controversy regarding the causality in terms of financial intermediation facilitating the economic growth. The regulation should be ex ante, with rules specified in advance, it should be selective, focused on those financial institutions that generate the biggest risk, but also simple, so that it is easy to establish whether the regulatory requirements have been breached or not. New ideas in regulation are focused on reducing the leverage, with the reduced lending capacity as the consequence, but also the improved stability of the system. Small countries at the middle level of development should not be innovative in the financial regulation, but carefully monitor the development of new regulatory instruments in the world. There is no fundamental alternative to the incumbent pattern of financial intermediation that could accelerate the economic growth.Keywords: financial intermediation, financial system, economic growth, regulation, banking system JEL: G20, G21, G28, O42 UvodCilj ovog rada je da razmotri odnos finansijskog posredovanja i privrednog rasta iz specifičnog ugla, tako da odgovori na pitanje da li postoji velika, fundamentalna alternativa postojećem načinu finansijskog posredovanja. Ovakav cilj rada uslovio je i njegovu strukturu. Prvo će se razmotriti odnos finansijskog posredovanja i privrednog rasta, uz usredsređivanje na najznačajnije moguće kontroverze na tom planu. Potom će se pažnja posvetiti nesavršenoj informisanosti kao najznačajnijem vidu nesavršenosti finansijskih tržišta, ukazujući na specifične pojavne oblike te nesavršenosti, poput neizvesnosti, rizika i asimetrije informacija, da bi se, nakon toga, ukaza...

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Cream Skimming in Financial Markets

Cited by 32 publications

References 28 publications

Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach

Economic growth, financial development and trade openness in Nigeria: An application of the ARDL bound testing approach

Wages and Human Capital in Finance: International Evidence, 1970-2005

Financial intermediation and economic growth: Is there a great alternative?

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