Special Issue "Financial Development and Economic Growth"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Economics and Finance".

Deadline for manuscript submissions: closed (31 December 2022) | Viewed by 20161

Special Issue Editors

Prof. Dr. Peter J. Stauvermann
E-Mail Website
Guest Editor
Department of Global Business & Economics, Changwon National University, 51-140 Changwon, Korea
Interests: economic growth; tourism economics; public economics; environmental economics
Special Issues, Collections and Topics in MDPI journals
Dr. Ronald Ravinesh Kumar
E-Mail Website
Guest Editor
Department of Economics & Finance, School of Business & Management, RMIT University Vietnam, 702 Nguyen Van Linh District 7, Ho Chi Minh City, Vietnam
Interests: financial sector stability; financial development and economic growth; financial inclusiveness; financial risk management; development finance; financial development in small developing economies
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

It is my pleasure to invite you to submit a manuscript for the Special Issue on “Financial Development and Economic Growth” for the Journal of Risk and Financial Management.

Financial development is a pivotal part of economic development and growth. Financial system is comprised of various types of financial institutions, and these institutions potentially contribute to the expansion of financial services and financial development. Financial development can directly or indirectly influence economic growth. Various measures of financial development have been proposed.

This issue welcomes studies on financial development viz. economic activities and the potential of financial development to enhance economic growth. The issue aims to attract papers that examine the role of financial development at macro or micro levels. Studies can consider the conventional or contemporary measures of financial development, can be country-specific or region-based, can examine the direct or indirect contributions of financial development, and can strives towards proposing sound strategies to make financial system growth-enhancing. In this regard, papers submitted should maintain a good balance between the appreciation of relevant existing literature, the appropriateness of methodology and analysis leading to result-based policy implications, and the efforts to make some novel contributions in the field of study.

Prof. Dr. Peter J. Stauvermann
Dr. Ronald Ravinesh Kumar
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1400 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • financial development
  • profitability, stability, competition, and performance
  • macroeconomic factors
  • structural factors
  • socioeconomic factors
  • market structure
  • commercial banks
  • nonbank financial institutions
  • financial inclusion
  • remittances and other financial flows
  • financial statement analysis
  • savings, investment, consumption, human capital
  • country-specific or region-based analysis
  • empirical analysis
  • theoretical analysis

Published Papers (14 papers)

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Research

Article
Empirical Research Study on the Determinants of Market Indicators for 41 Financial Institutions
J. Risk Financial Manag. 2023, 16(2), 78; https://doi.org/10.3390/jrfm16020078 - 28 Jan 2023
Viewed by 261
Abstract
Economic development must consider the evolution of the banking system in general, and the evolution of individual banks on capital markets in particular. As these financial institutions are catalysts for national economies and economic development, studying the main determinants of their market indicators [...] Read more.
Economic development must consider the evolution of the banking system in general, and the evolution of individual banks on capital markets in particular. As these financial institutions are catalysts for national economies and economic development, studying the main determinants of their market indicators is both timely and important. This research investigated the impact of various financial ratios on market indicators for a sample of 41 financial institutions during the period of Q4 2013–Q4 2021. The empirical results showed that market indicators were mainly influenced by ratios such as return on assets, total debt to assets ratio, and total debt to total capital. In light of these results, management teams in the banking system are called upon to monitor aspects related to bank revenue and bank performance with the purpose of obtaining solid market indicators and attracting potential stock market investors. Relevant policy implications regarding the market performance of listed financial institutions are also addressed. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
Article
Financial Inclusion in West African Economic and Monetary Union’s Economies: Performance Analysis Using Data Envelopment Analysis
J. Risk Financial Manag. 2022, 15(12), 605; https://doi.org/10.3390/jrfm15120605 - 14 Dec 2022
Viewed by 552
Abstract
A data envelopment analysis (DEA) has yet to be chosen to assess countries’ financial inclusion levels. We introduce an application of the DEA methodology to compute aggregate performance measures regarding the financial inclusion of economies. We specifically explore composite scores based on relative [...] Read more.
A data envelopment analysis (DEA) has yet to be chosen to assess countries’ financial inclusion levels. We introduce an application of the DEA methodology to compute aggregate performance measures regarding the financial inclusion of economies. We specifically explore composite scores based on relative efficiency, super-efficiency, and cross-efficiency approaches. We implement the proposed procedure to study the financial inclusion in nations from the West African Economic and Monetary Union (WAEMU). We use the Union’s Central Bank’s financial inclusion data from 2010 to 2017. We obtain robust financial inclusion level measures, showing that overall, in the Union, there have been steady improvements during the study period, but with heterogenous behavior at the level of each economy. A benchmarking analysis allowed us to determine the countries with the best practices. For the remaining nations, we find their reference countries. Finally, we identified which financial service sectors drive the financial inclusion in each country from the optimal weights of the DEA model. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Carry Trade and Capital Market Returns in South Africa
J. Risk Financial Manag. 2022, 15(11), 498; https://doi.org/10.3390/jrfm15110498 - 27 Oct 2022
Viewed by 546
Abstract
This paper assesses the extent to which carry trade operations affect the performance of equity and bond markets in a target country, South Africa, by considering the US and the euro area as the funding countries. A two- and three-factor capital asset pricing [...] Read more.
This paper assesses the extent to which carry trade operations affect the performance of equity and bond markets in a target country, South Africa, by considering the US and the euro area as the funding countries. A two- and three-factor capital asset pricing model (CAPM) is employed to assess whether the pricing of equity and bond markets in South Africa depends on the US dollar/rand and euro/rand carry trade returns. Moreover, the paper uses the quantile regression technique to assess whether this pricing varies with the distribution of the equity and bond returns. The findings support that the US- and euro-funded carry trade are essential factors for the pricing of equity and bond markets in South Africa. Moreover, the results of the two-factor model show a negative relationship between the equity excess return and the US-carry trade returns at lower quantiles of the equity market returns. The positive relationship is observed in the upper quantiles of the equity market. The negative relationship means that carry trade activities reduce equity market returns during a bear market as investors close out their position when conditions in the equity market become unfavourable. The results of the three-factor model, controlling for the global volatility or uncertainty, show that carry trade investors exit the equity market to invest in the bond market when global uncertainty rises. This finding shows that carry trade investors choose less risky assets during rising global uncertainty. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Imperfect Competition, Real Estate Prices and New Stylized Facts
J. Risk Financial Manag. 2022, 15(3), 99; https://doi.org/10.3390/jrfm15030099 - 23 Feb 2022
Viewed by 1248
Abstract
In this paper, we develop an overlapping generation model with imperfect competition and land to provide a theoretical foundation for some empirical observations made since the end of the 1970s. The problem is that these new “stylized facts” do not coincide with Kaldor’s [...] Read more.
In this paper, we develop an overlapping generation model with imperfect competition and land to provide a theoretical foundation for some empirical observations made since the end of the 1970s. The problem is that these new “stylized facts” do not coincide with Kaldor’s stylized facts and unfortunately the standard growth models are not able to explain these new facts. By using our model, we are able to theoretically derive these new facts and to provide a theoretical foundation for them. In particular, increasing market concentration leads to a decline in the labor income share, to a decline in the capital income share, to a decline in the natural interest rate, to an increasing wealth to income ratio, and to an over-proportional increase in land prices in developed countries. The model developed for analysis has close similarity with the standard neoclassical overlapping generation model with endogenous growth and land. The main difference between the standard neoclassical and the model in this paper is the market structure. Instead of assuming perfectly competitive markets, we assume an oligopolistic market structure. This leads to the occurrence of pure profits for firms and, accordingly, the input factors are no longer paid their marginal products. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
The Capitalist Spirit and Endogenous Growth
J. Risk Financial Manag. 2022, 15(1), 27; https://doi.org/10.3390/jrfm15010027 - 10 Jan 2022
Cited by 2 | Viewed by 906
Abstract
The aim of the study is to investigate the influence of the capitalist spirit in conjunction with the distribution of income on economic growth. The capitalist spirit is represented by the fact that savings rates increase with increasing relative income. We extend an [...] Read more.
The aim of the study is to investigate the influence of the capitalist spirit in conjunction with the distribution of income on economic growth. The capitalist spirit is represented by the fact that savings rates increase with increasing relative income. We extend an endogenous AK growth model in an overlapping generational framework by implementing imperfect competition and Cournot competition. Using this model, we investigate the influence of profits on the intra- and inter-generational distributions of income and economic growth. While increasing incomes lead to a more unequal intra-generational distribution and to a redistribution of income from the old to the young generation, the impact on economic growth is in general ambiguous, although under specific assumptions it becomes positive. Furthermore, the model shows that increasing market power of firms is associated with declining labor and capital shares, declining interest rates, and an increased wealth-to-income ratio. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
An Analysis of the Effects of Public Investment on Labor Demand through the Channel of Economic Growth with a Focus on Socio-Professional Categories and Gender
J. Risk Financial Manag. 2021, 14(12), 580; https://doi.org/10.3390/jrfm14120580 - 02 Dec 2021
Cited by 1 | Viewed by 1489
Abstract
The paper aims to analyze the impact of public investments generated by implementing the Emerging Senegal Plan (ESP) on economic growth and gender inequalities observed in the labor market in Senegal. A dynamic computable general equilibrium modeling was carried out for this purpose [...] Read more.
The paper aims to analyze the impact of public investments generated by implementing the Emerging Senegal Plan (ESP) on economic growth and gender inequalities observed in the labor market in Senegal. A dynamic computable general equilibrium modeling was carried out for this purpose using a social accounting matrix (SAM) based on an extensive segmentation of the labor market according to gender and socio-professional category. The results prove that the investments made in priority market sectors led, overall, to a good trajectory of economic growth. Moreover, job creation followed the expansion of sectors of the economy, which increased their demand for labor because of the capital increase. In conclusion, there is a strong demand for qualified women (senior executives and middle executives). We recommend considering positive discrimination in favor of women by implementing public employment programs and the importance of recovery sectors affected by the pandemic. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Evaluation of the Financial Performance of the Municipalities in Slovakia in the Context of Multidimensional Statistics
J. Risk Financial Manag. 2021, 14(12), 570; https://doi.org/10.3390/jrfm14120570 - 25 Nov 2021
Cited by 3 | Viewed by 893
Abstract
In some studies, only financial aspects are emphasized, but we also see cases of assessing the financial health of municipalities through socio-economic indicators. Public organizations worldwide have had to increase their financial performance by adopting management practices. Nonetheless, financial performance might be mostly [...] Read more.
In some studies, only financial aspects are emphasized, but we also see cases of assessing the financial health of municipalities through socio-economic indicators. Public organizations worldwide have had to increase their financial performance by adopting management practices. Nonetheless, financial performance might be mostly predicted by contingencies that are not within direct managerial control. The purpose of this paper is to identify clusters of municipalities on the basis of agglomerate cluster analysis, the results of which will point to the financial situation of the municipalities in the selected region. The main aim of this contribution is to identify the location of the municipalities of the chosen self-governing region of Slovakia using the clustering method by selected financial indicators. Individual clusters have similar properties and they differ from the characteristics of businesses in other clusters. The results show that organizational and environmental contingencies affect financial performance, but a significant amount of variation in financial performance is unexplained—indicating that management creates better financial health in the municipality and creates a clearer budget for the management, employees, and residents of the municipality. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
The Nexus between Financial Development and Economic Growth: Panel Data Evidence from Developing Countries
J. Risk Financial Manag. 2021, 14(10), 489; https://doi.org/10.3390/jrfm14100489 - 14 Oct 2021
Cited by 6 | Viewed by 1135
Abstract
The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is [...] Read more.
The objective of this study is to investigate the nexus between financial development (FD) in economic growth (GROWTH) in developing countries. The study uses panel data from 138 developing countries during the period 1980–2018. The relationship between financial development and economic growth is investigated using four explanatory variables that are commonly used to measure the level of financial development and several other control variables, including a dummy variable representing the financial and banking crises. The sample of 138 developing countries is also classified into six geographic regions. We have carried out panel unit-root tests and panel cointegration tests before estimating the specified models using both Panel Least Squares (Panel LS) and Panel Fully Modified Least Squares (FMOLS) methods. In addition, panel Granger causality tests have been conducted to identify the direction of causality between FD and GROWTH for each of the regions. The results of the study provide evidence of a direct relationship between FD and GROWTH in developing countries. Furthermore, there is evidence of bi-directional causality running from FD to GROWTH and from GROWTH to FD in samples of Europe and Central Asia, South Asia, and all countries, but not in East Asia and Pacific, Latin America and the Caribbean, Middle East and North Africa, and Sub-Saharan Africa. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
Article
Causality between Energy Consumption and Economic Growth in the Presence of Growth Volatility: Multi-Country Evidence
J. Risk Financial Manag. 2021, 14(10), 471; https://doi.org/10.3390/jrfm14100471 - 07 Oct 2021
Cited by 2 | Viewed by 879
Abstract
Falling energy intensity (increasing efficiency) is believed to be a result of more efficient production methods that have evolved over time, indicating overall sustainability in the production process. The objective of this study is to investigate the diminishing trend of energy intensity and [...] Read more.
Falling energy intensity (increasing efficiency) is believed to be a result of more efficient production methods that have evolved over time, indicating overall sustainability in the production process. The objective of this study is to investigate the diminishing trend of energy intensity and the related volatilities in growth of energy consumption and income growth through the energy–growth nexus. The country specific long-run and short-run causal relationships among real energy consumption per capita, real GDP per capita, and the volatilities of growth in income and the growth in energy consumption are established using the method proposed by Yamamoto–Kurozumi within a cointegration framework in 48 countries. The overall findings suggest that energy intensity is falling, in conjunction with the existing evidence on the energy–growth nexus in most of the countries studied; hence, implicitly this confirms sustainability. The results based on volatility analysis show a significant decrease in energy use in response to increasing income growth volatility. The negative effects of income growth volatility on energy consumption are usually countered through compensation measures, with subsidies provided to households and producers in order to smooth the energy consumption behaviours in those economies. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Revisited: Monopoly and Long-Run Capital Accumulation in Two-Sector Overlapping Generation Model
J. Risk Financial Manag. 2021, 14(7), 304; https://doi.org/10.3390/jrfm14070304 - 03 Jul 2021
Cited by 4 | Viewed by 1305
Abstract
In this paper, we investigate if an increasing competition in an oligopolistic market will enhance the real incomes and consumer surplus in the long run. For this purpose, we apply a two-sector overlapping generation model in which members of the young generation own [...] Read more.
In this paper, we investigate if an increasing competition in an oligopolistic market will enhance the real incomes and consumer surplus in the long run. For this purpose, we apply a two-sector overlapping generation model in which members of the young generation own the oligopolistic firms. We show that increasing competition in the oligopolistic market leads to ambiguous outcomes regarding the real income and consumer surplus in the long run. However, we show that the distribution of income will become fairer if the competition increases, but it is possible that the price for a fairer distribution is a lower income for all members of the economy. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Financial Performance of Iranian Banks from 2013 to 2019: A Panel Data Approach
J. Risk Financial Manag. 2021, 14(6), 257; https://doi.org/10.3390/jrfm14060257 - 08 Jun 2021
Viewed by 1480
Abstract
It is widely believed that the financial system is dependent on the banking industry, and its strength and development are vital for economic prosperity. This paper tried to show the financial performance of Iranian banks listed on the Tehran Stock Exchange (TSE) during [...] Read more.
It is widely believed that the financial system is dependent on the banking industry, and its strength and development are vital for economic prosperity. This paper tried to show the financial performance of Iranian banks listed on the Tehran Stock Exchange (TSE) during 2013–2019, as the research population. The statistical population included 18 banks listed on the TSE from 2013 to 2019, which were sampled using a screening method. The results indicated a significant relationship between explanatory variables of capital ratio and the financial performance of banks in all models. However, a significant negative relationship was found between the inflation rate and the financial performance of banks in all models. Furthermore, it seems that banks with high asset strength are more profitable than the others. Regulators should guarantee that banks remain highly capitalized for a viable banking sector in Iran. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
Article
The Heterogeneous Impact of Financialisation on Economic Growth in the Long Run
J. Risk Financial Manag. 2021, 14(5), 209; https://doi.org/10.3390/jrfm14050209 - 05 May 2021
Viewed by 1946
Abstract
Financialisation, i.e., the process by which financial markets and their participants gain more influence over the functioning of enterprises/companies and the framework of the financial system, changes the functioning of the economic system, both at the macro- and microeconomic level. There is no [...] Read more.
Financialisation, i.e., the process by which financial markets and their participants gain more influence over the functioning of enterprises/companies and the framework of the financial system, changes the functioning of the economic system, both at the macro- and microeconomic level. There is no doubt that financialisation impacts economic growth. Still, research does not substantiate the heterogeneity of financialisation effects and does not provide a comprehensive analysis of the sources of heterogeneity. In most cases, researchers provide only theoretical insights into what may lead to different effects of financialisation on economic growth. This study empirically examines whether institutional quality and economic development intermediate the relationship between financialisation and economic growth using a panel of 96 countries over the period of 1996–2017 and least squares dummy variables (LSDV) estimator. We found that the impact of financialisation on economic growth differs across countries and that institutional quality and economic development are the sources of the heterogeneous impact of financialisation on economic growth. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
The Relationship between Yield Curve and Economic Activity: An Analysis of G7 Countries
J. Risk Financial Manag. 2021, 14(2), 62; https://doi.org/10.3390/jrfm14020062 - 02 Feb 2021
Cited by 4 | Viewed by 1900
Abstract
The yield curve is an important tool to assess the economic progress of a country. In this study, we examine the strength of the relationship between term spread and economic activity, and between the components of the yield curve and economic activity in [...] Read more.
The yield curve is an important tool to assess the economic progress of a country. In this study, we examine the strength of the relationship between term spread and economic activity, and between the components of the yield curve and economic activity in the G7 countries using monthly data on yield rates and seasonally adjusted data on the industrial production index (IPI). After matching the start and end date of the IPI with the yield rates, the data used and respective time period are as follows: Canada: March-1994 to December-2018, France: January-1999 to December-2018, Germany: October-2005 to December-2018, Italy: July-2009 to December-2018, Japan: July-1994 to January-2019, the UK: January-1994 to December-2018, and the US: February-1990 to January-2019. The results show positive associations between term spread and economic activity for Canada, France, Germany, Japan, the UK, and the US. For Italy, a negative association is noted. All three empirical factors could predict economic activity for France and Germany at the 12-month horizon only. For all other horizons, the factors’ ability to predict economic activity varies. We observe that by including additional macro-finance variables such as the current economic growth rate and the 3-month yield rate to capture the term structure level effects, the relationship between term spread and economic activity becomes stronger. This implies that the usefulness of yield curve and its decomposed components for the purpose of predicting economic activity should be cautiously modelled and employed for policy. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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Article
Effect of Fisheries Subsidies Negotiations on Fish Production and Interest Rate
J. Risk Financial Manag. 2020, 13(12), 297; https://doi.org/10.3390/jrfm13120297 - 29 Nov 2020
Cited by 7 | Viewed by 2302
Abstract
We analyze the effect of fisheries subsidy negotiations on financial markets and aggregate demand in developed and developing countries. We examine the plausible scenarios that are likely to emerge in the event of elimination or reduction of subsidies, and the subsequent effect on [...] Read more.
We analyze the effect of fisheries subsidy negotiations on financial markets and aggregate demand in developed and developing countries. We examine the plausible scenarios that are likely to emerge in the event of elimination or reduction of subsidies, and the subsequent effect on the financial markets and the fish production. We use the Keynesian macroeconomic static framework, which is based on an extended well-known investment-savings (IS) and liquidity preference–money supply (LM) model for analysis. Our analysis shows that the impact of a reduction in fisheries subsidies would reduce the exploitation of fish and marine resources in developing countries, thus leading to a general increase in fish prices and quantity stabilizing at lower levels. We also find that this effect would transfer to financial markets, leading to a decline in interest rates for fish exporting developing countries, but interest rates tend to stabilize at higher levels for fish importing developed countries. Full article
(This article belongs to the Special Issue Financial Development and Economic Growth)
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