1,721,092 research outputs found
Creditor protection and financial markets: empirical evidence and implications for Latin America
Full text linkAlthough Latin American countries have made significant strides in reforming their financial markets, these markets remain shallow, implying a need for further reform. Stronger protection of creditor rights can improve the size and stability of credit markets and provide greater access to capital for small and medium-sized enterprises that operate under greater financial strictures. ; In discussing creditor protection’s impact on the size of financial markets, the authors first document the state of Latin American creditor protection. They then discuss the effect of enhanced creditor rights on small and medium-sized firms and how the dynamics of financial markets are affected by the regulation of creditor rights. To examine the effects of adverse economic shocks on creditors, the authors study the credit cycle in various countries. ; In addition to increasing the size of financial markets and stimulating economic growth, reforms that strengthen creditor protection can affect credit allocation, the authors find. Their research suggests that the rules and regulations concerning the seizure of collateral need reforming and, more importantly, that the judicial system must become more agile to assure prompt, effective, and less expensive enforcement of creditor rights. The authors note that the successful introduction of these reforms may require convincing the citizenry that creditor protections benefit not only the financial sector but the economy overall.Economic stabilization
Bank Concentration and Credit Volatility
Full text linkThis paper uses an unbalanced panel covering ninety-three countries over the 1990-2002 period to study the empirical relationship between bank concentration and credit volatility. The paper finds that there is a strong negative relationship between loans concentration and credit sensitivity to external shocks. It also shows that this result is robust to different samples, measures of concentration and econometric techniques, and that this relationship is not driven by crisis episodes. These results are in line with the hypothesis that banks with a larger market share can internalize the countercyclical effects of expanding credit during recessions.
Sanguinity and aspiration toward South Asian Regional integration: a case study of the South Asian Free Trade Area (SAFTA) Agreement
Full text linkThe expansion of regional economic cooperation was one of the major developments in the world political economy after the Second World War. Factors that thrust countries closer were both economic and political but economic factors prevailed; the classic example was the EU and ASEAN where economic dimension have brought long time foes in the same dais. The present international economic situation characterized by stagnant growth, recessionary conditions, and protectionist tendencies in the developed countries has seriously underpinned the economic growth in developing countries. The worsening terms of trade, acute balance of payment crisis and debt burden on developing countries have further crippled the potential economic growth of these countries. Therefore current world economic conditions call for a greater economic cooperation among the developing countries. Around 330 agreements are notified in World Trade Organization (WTO). Apart from Mongolia, all WTO members are involved in one or more regional trade agreements. Unsuccessful WTO talks in Cancun increased a world-wide trend towards regional cooperation and integration, such as EU, NAFTA, CAFTA, MERCOSUR, ASEAN, SAARC etc. The latest report by the World Bank, entitled Global Economic Prospects: Managing the Next Wave of Globalization predicts that in the next 25 years the growth in the global economy will be powered by the developing countries, whose share in global output will increase from about one-fifth of the global economy to nearly one-third. It means that some of the key drivers in the global economy will be China and some of the countries from South Asia. There are today six developing countries which have populations greater than 100 million and GDP of more than $100 billion. By 2030, there will be 10 countries that would have reached the twin 100s threshold, and four of them will be from the vicinity of South Asia. In addition to India and China, who have already reached that level, Pakistan and Bangladesh are also likely to be part of this dynamic group. Increased participation in global trade was an important determinant of economic growth of the catch-up economies. This is one reason why South Asia has lagged and has not been a catch-up economy. Could the decision of the 2004 SAARC summit change South Asia’s economic structure and move towards economic union? Can South Asia become a major player in the global economic and trading system? The following report aims to come across the answer of the above issue regarding SAFTA.REGIONALISM: BUILDING BLOCK OR STUMBLING BLOCK?; WTO PROVISIONS FOR PTAS/RTAS; Trade Facilitation; South Asian position:
Capital account liberalization, financial development and industry growth: a synthetic view
Full text linkThis paper synthesizes previous studies analyzing the effects of capital account liberalization on industry growth while controlling for financial crises, domestic financial development and the strength of institutions. We find reasonably strong evidence that financial openness has positive effects on the growth of financially-dependent industries, although these growth-enhancing effects evaporate during financial crises. Further analysis indicates that the positive effects of capital account liberalization are limited to countries with relatively well-developed financial systems, good accounting standards, strong creditor rights and rule of law. It suggests that countries must reach a certain threshold in terms of institutional and economic development before they can expect to benefit from capital account liberalization.Capital account liberalization, Financial development, External dependence
Minimum Wages in Kenya
Full text linkThis paper examines the performance of minimum wage legislation in Kenya, both in terms of its coverage and enforcement as well as in terms of their implications for wages and employment. Our findings based on the 1998/99 labor force data – the last labor force survey available – indicate that minimum wages, which, in principle, apply to all salaried employees, were better enforced and had stronger effects in the non-agricultural industry than in the agricultural one. More specifically, our results suggest that (i) compliance rates were higher in occupations other than agriculture, (ii) minimum wages were positively associated with wages of low-educated workers and women in non-agricultural activities, while no such relationship is found for workers in agriculture, and (iii) higher minimum wages were associated with a lower share of workers in formal activities in a given occupation and location. Our estimates indicate that a 10 percent point increase in the minimum to median wage ratio could be associated with a decline in the share of formal employment of between 1.2-5.6 percentage points and an increase of between 2.7-5.9 points in the share of self-employment.Kenya, employment, minimum wages, wage
Creditor Protection and Credit Response to Shocks
No full textCreditor Protection and Credit Response to Shocks Arturo Jose Galindo and Alejandro Micco This article studies the relationship between creditor protection and credit responses to macroeconomic shocks. Using a data set on legal determinants of finance in a panel of data on aggregate credit growth for 79 countries during 1990 2004, it is shown that credit is more responsive to external shocks in countries with weak legal creditor protection and weak enforcement. The results are statistically and economically significant and robust to alternative measures of creditor protection, to the inclusion of variables that reflect different stages of economic development, to the restriction of the sample to only developing economies, to the controls for systemic crises, to alternative shock measures, and to vector autoregressive specifications. One strand of the literature has shown that an institutional setup that adequately protects creditor rights (CR) can align the incentives of debtors and lenders, increase the expected payoffs of lending, and deepen financial markets. Source: Authors' analysis is based on the data noted in table A-1. Panel a shows how the development of credit markets (as measured by the ratio of credit to the private sector supplied by the financial sector to GDP) is strongly related to a measure of legal protection to creditors: an index of effective creditor rights (ECR) protection that combines legal protection to creditors and their enforcement (higher values indicate stronger protection). Panel data on aggregate credit growth for 79 countries during 1990 2004 support the claim that better legal protections significantly reduce the sensitivity of credit to shocks. Rather than exploring the impact of shocks on output under different scenarios of financial development, it explores the impact of shocks on financial markets, under different institutional setups. Controlling For Systemic Banking Crises And Financial Liberalization Dependent variable: D log(Credit/GDP) (1) External shock External shock* ECR External shock* CL External shock* developed Systemic crisis dummy variable Financial liberalization 1 Financial liberalization 2 Number of observations Number of countries Country-fixed effects Year-fixed effects R-squared Sample 5.656 (1.395)*** 0.665 (0.229)*** -- 21.035 (1.824) 20.062 (0.016)*** -- -- 1.022 79 Yes Yes 0.16 (2) 6.804 (1.663)*** -- 23.198 These results are robust to alternative measures of creditor protection, to the inclusion of variables that reflect different stages of economic development, to the restriction of the sample to developing economies, to controlling for systemic crises and financial liberalization, to alternative shock measures, to possible asymmetric responses, and to vector autoregression dynamic specifications
International Capital Flows, Financial Stability and Growth
Full text linkThe explosion and dramatic reversal of capital flows to emerging markets in the 1990s have ignited a heated debate, with many arguing that globalization has gone too far and that international capital markets have become extremely erratic. In contrast, others have emphasized that globalization allows capital to move to its most attractive destination, fuelling higher growth. This paper re-examines the characteristics of international capital flows since 1970 and summarizes the findings of research of the 1990s on the behaviour of international investors as well as the short- and long-run effects of globalization on financial markets and growth.international capital flows, globalization, mutual funds, stock market prices, financial liberalization.
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Financial Diversification, Sudden Stops and Sudden Starts
Full text linkThe recent literature on sudden stops is based on the fact that many emerging market economies experience recurrent and sharp capital account reversals. In this paper we argue, as some recent research has started to emphasize, that more information can be obtained by looking at gross rather than net flows. Economies may be curtailed from international financial markets, resulting in a sudden stop of inflows, but others may be experiencing portfolio shifts that cause sudden start of capital outflows. By looking at gross flows, and comparing emerging markets (EMEs) with developed economies (DEs) we indeed show that there is a variety of experiences that cannot be lumped together. In particular, sudden stop of inflows are as common in DEs as in EMEs, but a key difference is that in the former outflows and inflows are negatively correlated, which dampen the reversal of net flows. We present a model of financial diversification to interpret these results which is consistent with most evidence we report here. l II) could be helpful on this task.
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