Effect of financial deepening on economic growth: Does it encourage income group transition?

Shapoval, Yuliia; Shpanel-Yukhta, Oleksii

doi:10.21511/bbs.16(4).2021.09

Cited by 4 publications

(3 citation statements)

References 28 publications

(15 reference statements)

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“…2. it reduces the cost of attracting customers by spreading aggregators of financial offers (Shapoval & Shpanel-Yukhta, 2021).…”

Section: Figure 1 Dynamics Of Accessibility Indicators By Groups Of C...mentioning

confidence: 99%

Peculiarities of Digitalization of Financial Services Among Countries by Income Groups: Conclusions for Ukraine

Shpanel-Yukhta¹

2022

TSEJ

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The article reveals the features of digitalization in the context of groups of countries by income level. The main channels of digitalization impact on the financial market and economic growth are highlighted. It is established that the combination of digitalization of financial depth and financial inclusion and the effectiveness of monetary policy stimulates economic growth. Comparison of 3 groups of indicators identical in economic value but with different impacts of digitalization (availability of an account – availability of a mobile account, availability of borrowings – availability of mobile borrowings, availability of savings – availability of mobile savings) and the indicator of electronic payments made it possible to generalize that digitalization does not significantly affect the stimulation of credit inclusion, but stimulates the expansion of access to banking operations: opening an account, making/receiving transfers and savings. Given the high level of financial inclusion in high-income countries, digitalization of financial services was also noted before the digitalization of financial services, digitalization only simplifies access to accounts and payments, but does not expand it (in particular, among high-income countries, the share of the population with open accounts in financial institutions is more than 96% in 2021). It is determined that digitalization can partially resolve the problem of low confidence in financial institutions. Thus, for the period from 2017 to 2021, the share of the population with mobile accounts in low-income countries exceeded the share of the population with accounts in formal financial institutions. It was noted that the COVID-19 pandemic and post-pandemic recovery have become an additional incentive to deepen the digitalization of financial services, as they have necessitated the expansion of remote communication channels and customer service for financial institutions. It is emphasized that the growth in the prevalence of electronic payments in the world as a whole is due to their ease of use for cross-border payments on global online trading platforms and the expansion of remote payments in the context of restrictions related to the COVID-19 pandemic. The trends of digitalization of financial services in Ukraine are summarized. The domestic level of prevalence of accounts in financial institutions and electronic payments among the population corresponds to the level of countries with an income level above the average. The need for financial deepening is emphasized, both from the point of view of the banks' resource banking (stimulating the transfer of savings to the financial sector and thus launching the economic cycle) and from the point of view of lending to the real sector. The advantage of digitalization in the conditions of martial law was highlighted, when due to the high level of financial services coverage it was possible to ensure payments – against the background of the complication of the state's financial obligations to citizens and the risks of the country's payment system.

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“…2. it reduces the cost of attracting customers by spreading aggregators of financial offers (Shapoval & Shpanel-Yukhta, 2021).…”

Section: Figure 1 Dynamics Of Accessibility Indicators By Groups Of C...mentioning

confidence: 99%

Peculiarities of Digitalization of Financial Services Among Countries by Income Groups: Conclusions for Ukraine

Shpanel-Yukhta¹

2022

TSEJ

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“…Financial development creates favourable conditions for economic growth by stimulating the supply of financial products and services, and economic development creates anticipatory demand for them (e.g., Shapoval and Shpanel-Yukhta [11]). The higher the economic growth rate, the greater the firms and individuals need for financial intermediation.…”

Section: Benefits and Drawbacks Of Financial Deepeningmentioning

confidence: 99%

“…11 Regressions on the interconnection between economic growth, liabilities' structure and cost of financial resources…”

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confidence: 99%

Financial Depth-Economic Growth Nexus in Ukraine

2022

Problems of Innovation and Investment Development

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This book is dedicated to the ongoing debate on the nature of the relationship between financial depth and economic growth. It addresses the theoretical underpinnings of financial depth and reflects the changes in the nature of financial depth-economic growth nexus before and after the GFC. The distinctions between the financial depth-economic growth nexus in Ukraine and other countries, based on their income level, are identified. The dynamics and structure of Ukraine's state lending and debt are examined in order to show mutual connections between financial depth, economic growth and debt burden. The empirical study of the financial depth-economic growth nexus has allowed revealing that "too much finance" hypothesis does not hold for Ukraine, meanwhile, confirming the existence of the relationship between financial openness and financial deepening. The study is concluded with the analysis of the impact of war on the financial depth-economic growth nexus in Ukraine. This book will be a valuable resource for graduate students and academic researchers whose focus is on the financial and economic development.

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E: Policy, Law and Regulation

2022

World Banking Abstracts

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The banknotes are a round-up of news and salient issues that have affected central bankers in the past three months. The notes address the consequences of Russian invasion of Ukraine; spiralling inflation as major macroeconomic trend in late 2021; the quantitative easing programme of the Federal Reserve in the US; the Bank of England (BoE) raising interest rates twice; the European Central bank (ECB) declining to raise interest rates; China lowering interest rates as the economy cools, to say a few. The article highlights developed and developing countries' central bank decisions most notably in relation to inflationary pressures. 655/39Monetary policy spillover to small open economies: Is the transmission different under interest rates?

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Effect of financial deepening on economic growth: Does it encourage income group transition?

Cited by 4 publications

References 28 publications

Peculiarities of Digitalization of Financial Services Among Countries by Income Groups: Conclusions for Ukraine

Peculiarities of Digitalization of Financial Services Among Countries by Income Groups: Conclusions for Ukraine

Financial Depth-Economic Growth Nexus in Ukraine

E: Policy, Law and Regulation

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