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Cash holdings and corporate governance: The effects of premium listing in Brazil Review of Development Finance Pub Date : 2018-12-01 Aviner Augusto Silva Manoel, Marcelo Botelho C. Moraes, Marcelo Seido Nagano, Vinicius Amorim Sobreiro
Abstract Although some studies have analysed the effects of corporate governance practices on cash holdings, this study is the first, to the best of our knowledge, to analyse the effects of a non-mandatory premium listing that was designed to establish a higher standard of governance set by Brazilian public companies. The creation of a domestic and non-mandatory premium listing in 2000 offers a unique
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Time-varying transmission between oil and equities in the MENA region: New evidence from DCC-MIDAS analyses Review of Development Finance Pub Date : 2018-12-01 Basel Awartani, Farrukh Javed, Aktham Maghyereh, Nader Virk
Abstract In this paper we use the DCC-MIDAS (Dynamic Conditional Correlation-Mixed Data Sampling) model to infer the association between oil and equities in five MENA countries between February 2006 and April 2017. The model indicates that higher oil returns tends to reduce the long-term risk of the Saudi market, but to increase it in other markets. The risk transfer from oil to MENA equities is found
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Bank competition and regional integration: Evidence from ASEAN nations Review of Development Finance Pub Date : 2018-12-01 Alexia Ventouri
Abstract This study provides a characterization of the Association of the South East Asian Nations (ASEAN) banking system’s competition under the new environment that the implementation of the Financial Integration Framework (AFIF) implies. We focus on the largest banking markets in the region, represented by the ASEAN-5. The period under study is 2007–2016, covering the preparation period of the ASEAN
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Determinants of the non-life insurance market in Brazil Review of Development Finance Pub Date : 2018-12-01 Renata Telles Cavalcante, Vinicius Amorim Sobreiro, Herbert Kimura
Abstract The objective of this study is to analyse the relationship of economic growth and financial development as determinants of NLI premium consumption, using data from a highly volatile economic environment. The empirical results revealed a positive relationship among economic growth, credit, and the NLI market in Brazil. Results also suggest Granger bi-causality between economic growth and NLI
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Institutions, inward foreign direct investment, trade openness and credit level in emerging market economies Review of Development Finance Pub Date : 2018-12-01 Canh Phuc Nguyen, Christophe Schinckus, Thanh Dinh Su, Felicia Chong
Abstract This study investigates the effects of institutional quality, inward FDI, trade openness, and their interaction on the domestic credit equilibrium in 33 emerging economies between 2002 and 2015. Through two system-GMM estimators, our study shows that inward FDIs have a booming effect on the domestic credit in emerging market economies while the trade openness exhibits a crowding-out effects
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Determinants of credit risk in the banking system in Sub-Saharan Africa Review of Development Finance Pub Date : 2018-12-01 Trust R. Mpofu, Eftychia Nikolaidou
This paper investigates the macroeconomic determinants of credit risk in the banking system of 22 Sub-Saharan African economies. We measure credit risk as the ratio of non-performing loans to total gross loans (NPLs) and employ a dynamic panel data approach over the period 2000-2016. Using a variety of specifications, the results show that an increase in real GDP growth rate has a statistically and
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On the linkages between Africa’s emerging equity markets and global markets: Evidence from fractional integration and cointegration Review of Development Finance Pub Date : 2018-12-01 Luis Gil-Alana, Hector Carcel, Emmanuel Joel Aikins Abakah
Abstract This paper uses fractional integration and cointegration for the period of January 2000–June 2018 to investigate the stochastic properties of the bilateral linkages between stock markets in Africa and selected international markets to establish if markets in Africa co-move with the rest of the world. Results from the univariate analysis show that there exists a high degree of persistence with
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Financial development and intergenerational education mobility Review of Development Finance Pub Date : 2018-06-01 Annalisa Russino
Abstract Using years of education as a measure of status, we study the relationship between financial development and intergenerational mobility, focusing on human capital investments boosted by financial deepening. We consider a set of indices to capture different components of the overall intergenerational education mobility. Using a sample of 39 countries, we find that financial development is related
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Sub-Saharan African Eurobond yields: What really matters beyond global factors? Review of Development Finance Pub Date : 2018-06-01 Christian Senga, Danny Cassimon, Dennis Essers
This study explores the drivers of secondary market yields of Sub-Saharan African (SSA) sovereign Eurobonds from 2008 to mid-2017. Our results indicate that, beyond global ‘push’ factors, country specific ‘pull’ factors such as inflation and GDP growth matter too for SSA Eurobond performance. A panel error-correction analysis suggests large heterogeneity in the short-term influence of our global and
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Do small caps generate above average returns in the Brazilian stock market? Review of Development Finance Pub Date : 2018-06-01 Matheus José Silva de Souza, Danilo Guimarães Franco Ramos, Marina Garcia Pena, Vinicius Amorim Sobreiro, Herbert Kimura
Abstract Some studies suggest that low capitalization stocks have great potential to provide returns above the market average, although some indicate that investment in small caps should be avoided, since they are market anomalies with low liquidity. This article develops a method based on an automated trading system (ATS) applied to the Brazilian stock market, and investigates the relevance of small
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Bank concentration, competition, and financial inclusion Review of Development Finance Pub Date : 2018-06-01 Ann L. Owen, Javier M. Pereira
Expanding access to financial services holds the promise to help reduce poverty and foster economic development. However, little is still known about the determinants of the outreach of financial systems across countries. Our study is the first attempt to employ a large panel of countries, several indicators of financial inclusion and a comprehensive set of bank competition measures to study the role
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Credit risk in microfinance industry: Evidence from sub-Saharan Africa Review of Development Finance Pub Date : 2018-06-01 Sydney Chikalipah
Abstract Paradoxically, a plethora of empirical evidence in the traditional banking industry claims that smaller loans are associated with higher risk and the exact opposite is true for large loans. In this study we investigate these claims by estimating the relationship between loan sizes and credit risk in the microfinance industry. The sample used for our analysis incorporates over 2000 annual observations
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The role of financial development in poverty reduction Review of Development Finance Pub Date : 2017-12-01 Johan Rewilak
This paper investigates whether financial development is conducive in poverty reduction. Separating financial development into four categories and using newly available data this paper finds that both financial deepening and greater physical access is beneficial in reducing the proportion of people below the poverty line. Using alternative measures of financial instability, the results also challenge
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Regulating capital flows in emerging markets: The IMF and the global financial crisis Review of Development Finance Pub Date : 2017-12-01 Kevin P. Gallagher, Yuan Tian
Abstract In the wake of the financial crisis the International Monetary Fund (IMF) began to publicly express support for what have traditionally been referred to as ‘capital controls’. This paper empirically examines the extent to which the change in IMF discourse on these matters has resulted in significant changes in actual IMF policy advice. By creating and analyzing a database of IMF Article IV
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The exposure of microfinance institutions to financial risk Review of Development Finance Pub Date : 2017-12-01 Thomas Gietzen
This study examines the exposure of microfinance institutions to liquidity, interest rate and foreign exchange (FX) risk. It builds on a manually collected set of data on the maturity structure of assets and liabilities of the 309 largest microfinance institutions (out of which 112 actually report the maturity structure). The data suggests that, on average, microfinance institutions in the sample face
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The impact of SMEs’ lending and credit guarantee on bank efficiency in South Korea Review of Development Finance Pub Date : 2017-12-01 Lien-Wen Liang, Bor-Yi Huang, Chih-Feng Liao, Yu-Ting Gao
Abstract This study examines how small and medium-size enterprises’ (SMEs’) lending and credit guarantee affect Korean banks’ efficiency, by employing the stochastic frontier approach on 14 banks over the period 2001–2010. When lending increases to SMEs, the findings indicate that banks’ cost efficiency decreases due to information asymmetry. However, the increased proportion of credit guarantee can
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Regional economic integration in Mercosur: The role of real and financial sectors Review of Development Finance Pub Date : 2017-12-01 Hem C. Basnet, Gyan Pradhan
Abstract This study explores economic interdependence in Mercosur by examining common trends and common cycles among key macro-variables representing both the real and financial sectors of the economy. The serial correlation common features test reveals that the key macroeconomic variables (real output, investment, and intra-regional trade) share common trends in the long run suggesting that macroeconomic
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Examining evidence of ‘shift-contagion’ in African stock markets: A CoVaR-copula approach Review of Development Finance Pub Date : 2017-12-01 Gideon Boako, Paul Alagidede
Abstract This paper examines for the first time contagion to African stock markets with particular attention to the quantification of, and testing for the impact of (extreme) downside movements in foreign exchange and developed stock markets on the (extreme) downside risks in Africa stock markets. Using data of weekly periodicity, the empirical analysis captured the pre, during (both turmoil and acute)
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Inflation Forecasts’ Performance in Latin America Review of Development Finance Pub Date : 2017-12-01 João Tovar Jalles
Abstract This paper provides a full characterization of inflation rate forecasts using the mean values from Consensus Economics for a sample of 14 Latin American countries between 1989 and 2014. It also assesses the performance of inflation rate forecasts around business cycles’ turning points. Results show that inflation forecasts in the region display the standard property that as the forecast horizon
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Financial sector development in Africa–an overview Review of Development Finance Pub Date : 2017-06-01 Isaac Otchere,Lemma Senbet,Witness Simbanegavi
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Mobile financial services and financial inclusion: Is it a boon for savings mobilization? Review of Development Finance Pub Date : 2017-06-01 Shem Alfred Ouma, Teresa Maureen Odongo, Maureen Were
Abstract The adoption of mobile telephony to provide financial services in Africa has become instrumental in integrating the hitherto unbanked segments of the population to the mainstream financial systems. This study sought to establish this linkage by examining whether the pervasive use of mobile telephony to provide financial services is a boon for savings mobilization in selected countries in sub
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Financing the growth of SMEs in Africa: What are the contraints to SME financing within ECOWAS? Review of Development Finance Pub Date : 2017-06-01 Peter Quartey, Ebo Turkson, Joshua Y. Abor, Abdul Malik Iddrisu
Abstract This study attempts to provide some understanding about SMEs’ access to finance within the West African sub-region with particular interest in establishing whether there are similarities and/or differences in the determinants of SMEs access to finance across countries in SSA. For robustness sake, we developed both subjective and objective measures of access to finance. Using data from World
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Stock market development and integration in SADC (Southern African Development Community) Review of Development Finance Pub Date : 2017-06-01 Sunil K. Bundoo
Abstract The paper analyses the extent of stock market integration in SADC by first analyzing beta and sigma convergence and then using cointegration analysis. The US market and the SSA index were used as benchmarks. The sample period was from January 1999 to December 2011 using daily market index data. We observe beta convergence but not sigma convergence; though the sigma values are falling for most
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Financial liberalization and growth in African economies: The role of policy complementarities Review of Development Finance Pub Date : 2017-06-01 Ousmanou Njikam
Abstract This paper examines whether the effect of financial liberalization on economic growth depends on reform complementarities. A non-linear growth regression specification that interacts a proxy of financial liberalization with proxies of reform complementarities is estimated using a panel of 45 Sub-Saharan Africa (SSA) countries. The cross-country, panel-data evidence shows no clear relationship
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Credit risk determinants in Sub-Saharan banking systems: Evidence from five countries and lessons learnt from Central East and South East European countries Review of Development Finance Pub Date : 2017-06-01 Eftychia Nikolaidou, Sofoklis Vogiazas
Abstract Banking systems in Sub-Saharan Africa (SSA) have grown notably over the past decades due to benign macroeconomic, regulatory and financial trends. Nonetheless, downside risks remain elevated by structural issues, commodity price fluctuations, reversal of capital flows and spill-over effects from external shocks in a manner similar to the Central East and South East European (CESEE) countries
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Sectoral linkages of financial services as channels of economic development—An input–output analysis of the Nigerian and Kenyan economies Review of Development Finance Pub Date : 2017-06-01 Andreas Freytag, Susanne Fricke
Abstract Sectoral linkages of financial services of the Nigerian and Kenyan economies are evaluated by means of an input–output analysis for 2007, 2009 and 2011. Backward linkages, forward linkages, multiplier effects and variation indices for the financial services sectors are determined. Due to the increasing importance of mobile money, we additionally investigate these linkages for the communication
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Access to finance and firm performance: Evidence from African countries Review of Development Finance Pub Date : 2017-06-01 Babajide Fowowe
Abstract This study conducts an empirical investigation of the effects of access to finance on the growth of firms in African countries. In order to achieve this, we made use of a new rich enterprise-level data set from the World Bank’s Enterprise Surveys and employ both subjective and objective measures of access to finance. The subjective measure of access to finance is obtained from the ranking
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Capital requirement, bank competition and stability in Africa Review of Development Finance Pub Date : 2017-06-01 Jacob Oduor, Kethi Ngoka, Maureen Odongo
Abstract Monetary authorities around the world are implementing enhanced banking capital adequacy requirements under Basel III meant to improve financial stability. Critics however argue that increased capital requirements concentrate the banking industry reducing competition while not guaranteeing financial sector stability. Using data from 167 banks in 37 African countries, we find that increased
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A new index for measuring SADC exchange control restrictiveness Review of Development Finance Pub Date : 2016-12-01 Mark Ellyne, Rachel Chater
This paper addresses the issue of the assessment of foreign exchange and capital controls in the context of the Southern African Development Community's goal of regional integration. It reviews the pros and cons of current and capital account liberalisation and argues that there is a lack of sufficiently refined de jure measures of capital account openness. A new index for measuring exchange control
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Information asymmetry and financial development dynamics in Africa Review of Development Finance Pub Date : 2016-12-01 Simplice A. Asongu, Jacinta C. Nwachukwu, Vanessa S. Tchamyou
We examine policy thresholds of information sharing for financial development in 53 African countries for the period 2004-2011. Public credit registries (PCR) and private credit bureaus (PCB) are used as proxies for reducing information asymmetry whereas financial development includes all financial dimensions identified by the Financial Development and Structure Database (FDSD) of the World Bank, namely:
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Does infrastructure really explain economic growth in Sub-Saharan Africa? Review of Development Finance Pub Date : 2016-12-01 Odongo Kodongo, Kalu Ojah
In the light of Africa’s palpable deficit in public infrastructure, we use System GMM to estimate a model of economic growth augmented by an infrastructure variable, for a panel of 45 Sub-Saharan African countries, over the period 2000-2011. We find that it is the spending on infrastructure and increments in the access to infrastructure that influence economic growth and development in Sub-Saharan
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Banking sector globalization and bank performance: A comparative analysis of low income countries with emerging markets and advanced economies Review of Development Finance Pub Date : 2016-06-01 Amit Ghosh
Abstract A key feature of financial services liberalization is the increasing presence of foreign banks in a nation. This study examines the impact of banking sector globalization on bank profits and cost efficiency by using a panel of 169 nations spanning 1998–2013. Employing both fixed-effects and GMM estimations, and including banking-industry and macroeconomic controls, I find greater banking-sector
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Intra-industry momentum and product market competition around the world Review of Development Finance Pub Date : 2016-06-01 Ting Li
Abstract This paper examines the relationship between product market competition and intra-industry momentum returns. Based on 12,982 firm observations from 19 developed markets for the period of 1990–2010, I find that buying winners and selling losers in competitive industries generates significantly higher momentum profits than that in concentrated industries. The higher the intensity of product
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Financial stress in emerging markets: Patterns, real effects, and cross-country spillovers Review of Development Finance Pub Date : 2016-06-01 Mikhail Stolbov, Maria Shchepeleva
We extend the conventional approach to the construction of financial stress indices (FSI) for emerging economies proposed by Balakrishnan et al. (2011). Based on the principal component analysis, our index accounts for developments in the residential real estate market, adopts distinctive indicators for the banking sector and sovereign debt risks, covering the period from February 2008 to September
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The determinants of financial inclusion in Africa Review of Development Finance Pub Date : 2016-06-01 Alexandra Zins, Laurent Weill
The objective of this paper is to examine the determinants of financial inclusion in Africa. We use the World Bank's Global Findex database on 37 African countries to perform probit estimations. We find that being a man, richer, more educated and older favor financial inclusion with a higher influence of education and income. Mobile banking is driven by the same determinants than traditional banking