Exploring the role of energy, trade and financial development in explaining economic growth in South Africa: A revisit

South Africa is an emerging and industrializing economy which is experiencing remarkable progress. We contend that amidst the developments in the economy, the role of energy, trade openness and financial development are critical. In this article, we revisit the pivotal role of these factors. We use the ARDL bounds [72], the Bayer and Hanck [11] cointegration techniques, and an extended Cobb–Douglas framework, to examine the long-run association with output per worker over the sample period 1971–2011. The results support long-run association between output per worker, capital per worker and the shift parameters. The short-run elasticity coefficients are as follows: energy (0.24), trade (0.07), financial development (−0.03). In the long-run, the elasticity coefficients are: trade openness (0.05), energy (0.29), and financial development (−0.04). In both the short-run and the long-run, we note the post-2000 period has a marginal positive effect on the economy. The Toda and Yamamoto [91] Granger causality results show that a unidirectional causality from capital stock and energy consumption to output; and from capital stock to trade openness; a bidirectional causality between trade openness and output; and absence (neutrality) of any causality between financial development and output thus indicating that these two variables evolve independent of each other.

The effect of ownership structure, country governance, and financial development on the capital structure of unlisted eastern European firms

This paper investigates the determinants of capital structure for a sample of 20,713 unlisted firms from 11 eastern European countries over the period 1994-2004. We employ usual firm-specific financial variables as well as country-specific variables that describe the degrees of governance structure and financial development of each country. Using regression analysis, our results indicate that firm ownership concentration and country governance structure are insignificant explanatory variables to the degree of leverage of the firms in our sample. On the other hand, indicators of country financial development are robust determinants of capital structure. However, the marginal explanatory power of country-specific variables is small. We conclude that firm-specific characteristics are decisive in capital structure.

Law, Politics and Financial Development: The Great Reversal of the U.K. Corporate Debt Market

This article examines the role of creditor protection in the development of the U.K. corporate bond market. This market grew rapidly in the late nineteenth century, but in the twentieth century it experienced a reversal, albeit with a short-lived post-1945 renaissance. Such was the extent of the reversal that the market from the 1970s onwards was smaller than it had been in 1870. We find that law does not explain the variation in the size of this market over time. Alternatively, our evidence suggests that inflation and taxation policies were major drivers of this market in the post-1945 era. Copyright © The Economic History Association 2013

How can economic and political liberalisation improve financial development in African countries?

The objective of this paper is to study the interactions between Economic liberalisation, Political liberalisation and Financial development in African countries. More specifically, we seek to establish the impact of Economic, Political and institutional openness on financial deepening. The empirical approach will be two-step procedure, first using a difference in difference method to show the various aspect of financial liberalisation on economic and political freedom while the second step will be using panel data techniques from period 1990 to 2005. The estimation results can be summarised as the following, first, Economic and financial liberalisation did account significantly for the financial development performance. While political stability show a positive overall effect on financial development, the association with Political freedom is consistent only after controlling the endogeneity of Political freedom on financial development. This result indicates that the transformation of the political and economic environment has improved the performance of the financial sector.

Financial development and income inequality: evidence from African countries

This paper present empirical evidence on how financial development is related to income distribution in a panel data set covering 22 African countries for the period between 1990 to 2004. A dynamic panel estimation technique (GMM) is employ and the findings indicate that income inequality decrease as economies develop their financial sector, which is consistent with the bulk of theoretical and empirical research. The result also confirm that educational attainment play a significant role in making income distribution more equal. We also find no evidence supporting the Greenwood-Jovanovic hypothesis of an inverted-U- shaped relationship between financial sector development and inequality.

Financial development, shocks, and growth volatility

This paper uses spectral theory to develop the following two testable hypotheses in a unified framework for the predictions of business-cycle and endogenous growth models: (i) financial development affects only business-cycle volatility; and (ii) shocks affect both business-cycle volatility and long-run volatility of GDP growth. In other words, volatility caused by shocks is more persistent than that caused by financial underdevelopment. We decompose the business-cycle and long-run volatility by the spectral method and then test the hypotheses at the cross-country level. Empirical evidence provides support for both hypotheses. Higher private credit, a bank-based measure of financial development, dampens business-cycle volatility but not long-run volatility. Volatility of shocks, as measured by the volatility of changes in the terms of trade, magnifies both business-cycle and long-run volatility. The results are robust to accounting for endogeneity, a market-based measure of financial development, and an alternative method of volatility decomposition.

An essay on economic growth: classical determinants, convergence and financial development

This dissertation surveys the literature on economic growth. I review a substantial number of articles published by some of the most renowned researchers engaged in the study of economic growth. The literature is so vast that before undertaking new studies it is very important to know what has been done in the field. The dissertation has six chapters. In Chapter 1, I introduce the reader to the topic of economic growth. In Chapter 2, I present the Solow model and other contributions to the exogenous growth theory proposed in the literature. I also briefly discuss the endogenous approach to growth. In Chapter 3, I summarize the variety of econometric problems that affect the cross-country regressions. The factors that contribute to economic growth are highlighted and the validity of the empirical results is discussed. In Chapter 4, the existence of convergence, whether conditional or not, is analyzed. The literature using both cross-sectional and panel data is reviewed. An analysis on the topic of convergence using a quantile-regression framework is also provided. In Chapter 5, the controversial relationship between financial development and economic growth is analyzed. Particularly, I discuss the arguments in favour and against the Schumpeterian view that considers financial development as an important determinant of innovation and economic growth. Chapter 6 concludes the dissertation. Summing up, the literature appears to be not fully conclusive about the main determinants of economic growth, the existence of convergence and the impact of finance on growth.

Financial development, growth and equity in Brazil

Includes bibliography

Insurance underwriter or financial development fund: what role for reserve pooling in Latin America?

Includes bibliography

Liberalization or financial development?

Includes bibliography

Financial Development and Economic Growth: Time Series Evidence from Albania

The main objective of this thesis is to explore the short and long run causality patterns in the finance – growth nexus and finance-growth-trade nexus before and after the global financial crisis, in the case of Albania. To this end we use quarterly data on real GDP, 13 proxy measures for financial development and the trade openness indicator for the period 1998Q1 – 2013Q2 and 1998Q1-2008Q3. Causality patterns will be explored in a VAR-VECM framework. For this purpose we will proceed as follows: (i) testing for the integration order of the variables; (ii) cointegration analysis and (iii) performing Granger causality tests in a VAR-VECM framework. In the finance-growth nexus, empirical evidence suggests for a positive long run relationship between finance and economic growth, with causality running from financial development to economic growth. The global financial crisis seems to have not affected the causality direction in the finance and growth nexus, thus supporting the finance led growth hypothesis in the long run in the case of Albania. In the finance-growth-trade openness nexus, we found evidence for a positive long run relationship the variables, with causality direction depending on the proxy used for financial development. When the pre-crisis sample is considered, we find evidence for causality running from financial development and trade openness to economic growth. The global financial crisis seems to have affected somewhat the causality direction in the finance-growth-trade nexus, which has become sensible to the proxy used for financial development. On the short run, empirical evidence suggests for a clear unidirectional relationship between finance and growth, with causality mostly running from economic growth to financial development. When we consider the per-crisis sub sample results are mixed, depending on the proxy used for financial development. The same results are confirmed when trade openness is taken into account.