The impact of financial development on economic growth in middle-income countries

Yang, Fan

doi:10.1016/j.intfin.2018.11.008

Cited by 100 publications

(60 citation statements)

References 29 publications

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“…Kaul and Kayacetin in their 2017 paper find out that an increase in difference between large and small cap stock order flows, strongly and negatively forecasts output growth and interest rates in the US, their test period being from 1983 to 2006 (Kaul and Kayacetin, 2017). Just recently Granger causality was used to determine that only in high-income economies reverse causality between economic growth and equity market development is expressed, while in trapped middle-income economies banking system development and inflation are dually interrelated (Yang, 2019).…”

Section: Literature Reviewmentioning

confidence: 99%

Using Granger Causality to Determine Interconnectedness in Unlisted Banking Markets

2019

JAF

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risk was the main reason for last global financial crisis that exposed regulators, bankers and politicians towards the inability to manage and oversee the systemic risk. According to a study done in 2013 the approximate losses from average banking crisis amount up to 23% of GDP, with 2011 crisis in Latvia amounting up to 100% of potential GDP (Peydro, Laeven and Freixas, 2015; p.29, 117). The crisis forced regulators and policy makers to take unprecedented measures like capital purchase program, setting additional capital buffers and introducing new rules for derivative business. The macroprudential policy emerged as a new supervisory field. Ability to detect and evaluate interconnectedness in the banking system has been one of the key issues when evaluating systemic risk. Other aspects attributable to the systemic risk are the largeness of the bank (too big to fail), its complexity (Banulescu and Dumitrescu, 2015) or uniqueness in performing a crucial function for the market or state. With ever increasing globalization, free capital movement and unified pan-European regulation, banking markets in Central and Eastern Europe have experienced rapid changes that particularly influence interconnectedness side of the systemic risk. Banking markets in the Baltics still remain privately owned, as market share of listed commercial banks in the region remain low-from 0% in Latvia, to 7% in Estonia and 8% in Lithuania (as per author's calculation based on national stock exchange's database on listed banks, bank financial reports and European Central Bank National account statistics on bank balance sheets (assets and capital & reserves)). Therefore, the common tools to assess interconnectivity and systemic risk are un-applicable as for input data they use either changes of the price of the share (and similar traded assets) or loans between the

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Section: Literature Reviewmentioning

confidence: 99%

Using Granger Causality to Determine Interconnectedness in Unlisted Banking Markets

2019

JAF

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“…It is important to note that the MIT is a global concern and therefore, growth slowdown will have a significant impact on the world economy if it occurs in large middle-income economies like China and other developing countries. In other words, if the slowdown prolongs and worsens due to inadequate responses, its detrimental impacts on the world economy would be huge (Otsuka et al, 2017;Aiyar et al, 2018;Yang, 2019). Against such background, the current paper examines, systematically and empirically, the MIT hypothesis.…”

Section: Introductionmentioning

confidence: 97%

Growth Slowdowns and Middle-Income Trap: Evidence From New Unit Root Framework

Furuoka

Pui

Ezeoke

et al. 2020

Singapore Econ. Rev.

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This paper suggests a new testing procedure to systematically examine the middle-income trap (MIT). To empirically demonstrate this procedure, one high income and 14 middle-income countries are examined using newly developed unit root tests — Fourier ADF with structural break (FADF-SB) and Seemingly Unrelated Regressions Fourier ADF (SUR-FADF). The FADF-SB test incorporates unknown nonlinearity and smooth break in the time-series, while the SUR-FADF test accounts for cross-sectional dependency. The empirical findings produced mixed results: 10 countries have a relatively high possibility of facing the MIT problem, while only one country has a relatively low possibility of facing the problem. For the remaining three countries, it is uncertain whether they will face the problem of MIT. These empirical findings have significant policy implications.

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“…Similarly, a certain level of competition facilitates the financial sector to achieve market power through better earning ability, leverage, and efficiency (Kasman & Carvallo, 2014). Both monopoly and monopsony power distort free markets, hinder innovation, and leads to financial instability (Blair & Harrison, 2010;Noman, Gee, & Isa, 2018;Yang, 2019). Thus, the effectiveness of anti-monopoly policies may restrict major financial institutions to control the market and increase the cost of finance above their marginal revenue.…”

Section: Introductionmentioning

confidence: 99%

Do Transparency and Anti-Monopoly Policies Matter for Financial Development? Evidence from a Panel ARDL-PMG Approach

Zhang

Yahya

Pham

et al. 2021

Journal of Applied Economics

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The impact of financial development on economic growth in middle-income countries

Cited by 100 publications

References 29 publications

Using Granger Causality to Determine Interconnectedness in Unlisted Banking Markets

Using Granger Causality to Determine Interconnectedness in Unlisted Banking Markets

Growth Slowdowns and Middle-Income Trap: Evidence From New Unit Root Framework

Do Transparency and Anti-Monopoly Policies Matter for Financial Development? Evidence from a Panel ARDL-PMG Approach

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