This study aims to investigate the relationship between financial inclusion and household expenditure behaviour among Ghanaian households, by taking into account both formal and informal financial inclusion channels.
Propensity score matching as well as instrumental variable techniques are applied to data from the Ghana Living Standard Survey to investigate the effect of financial inclusion on the share of total expenditure devoted to different categories, including food, health, education, housing, durables, temptation goods and other goods.
Informal financial inclusion seems to have no substantial effect on households’ consumption behaviour, whereas formal financial inclusion significantly affects it. The study finds that formal financial inclusion is inversely related to the budget share devoted to short-term expenditure (food, temptation goods and other goods such as transport and recreation). Conversely, financially included households spend more on long-term expenditure such as education, housing and consumer durables, thus, suggesting a diversion effect towards investment in long-term physical and human capital.
The investigation of the heterogeneous impact across households (male vs female headed, rural vs urban) has essential policy implications on how financial inclusion can be improved among the disadvantaged groups, and with what effects.
The study focuses on the importance of financial inclusion in Ghana, considering both formal and informal financial inclusion channels. Previous studies only examined the overall effects on household welfare, overlooking the impact on household expenditure composition and consumption shares. The analysis also considers the heterogeneous impact of financial inclusion on households based on the gender of the household head and the location where households reside (rural, urban).
The purpose of this study is to examine institutional quality’s absorptive capacity in African countries’ remittances-finance nexus.
A balanced panel data set of thirty African countries between 2000 and 2022 is used for the study. The study adopts an augmented mean group (AMG), method of moment quantile regression (MMQR) and two-step system generalized method of moment (2SGMM) as the estimation techniques due to the nature of the data set.
The findings of the direct effect reveal that remittances do not constitute the growth of financial development, while institutional quality promotes the growth of financial development in the long. The moderating effect of institutional quality in the linkages shows that the interactive term of institutional quality and remittances has a significant positive effect on financial development in the region. Hence, institutional quality moderates the impact of remittances. These results are robust to different proxies of financial development and estimates obtained from MMQR and 2SGMM.
This study, therefore, suggests that institutional quality is essential in the linkages between remittances and financial development. Hence, remittances should be seen as one of the instruments that can be used to develop the financial sector rather than survival mechanisms for households.
This study contributes to the literature by unearthing the absorptive capacity of institutional quality in the nexus between remittances and financial development in African countries, which extant studies have neglected.
Since the liberalization policy of 1991, India has focused on export-led growth. However, the performance of international trade remains poor. This study aims to examine the role of credit constraints on the choice of Indian manufacturing firms to borrow in foreign currency. First, it explores the role of export activities in foreign currency borrowing (FCB). Second, it investigates how credit constraints forced these firms for foreign currency loans.
The study analysed data from 1,412 firms listed on the Bombay Stock Exchange in the manufacturing sector, covering the period from 1991 to 2022. A random effects probit model was used to examine the role of credit constraints on FCB, incorporating the influence of micro, small and medium enterprises (MSMEs) status and export activities. Additionally, a two-step system-generalized method of moment was used for robustness checks.
Export activities significantly influence FCB, with exporting firms showing a higher propensity to borrow foreign currency compared to domestically operating firms because of the increased funding needs of export activities. Larger firms are more likely to secure FCB than MSMEs, benefiting from collateral advantages. MSME exporting firms exhibit a higher tendency to borrow in foreign currency compared to large exporting firms.
This study focuses on firm-level data and considers only demand-side credit constraints. It does not examine supply-side credit constraints affecting FCB.
This study underscores the credit constraints faced by MSME exporters in the domestic market, leading them to rely on FCB. These insights are valuable for policymakers aiming to reduce MSMEs' dependency on FCB and enhance their export performance.
The findings highlight that MSME exporting firms are more inclined to borrow in foreign currency than their larger counterparts. This tendency is driven by the credit constraints MSMEs face because of asymmetric information and underdeveloped financial markets, which compel them to seek FCB.
This study aims to explore the intricate relationship between uncertainty indicators and volatility of commodity futures, with a specific focus on agriculture and energy sectors.
The authors analyse the volatility of Indian agriculture and energy futures using the GARCH-MIDAS model, taking into account different types of uncertainty factors. The evaluation of out-sample predictive capability involves the application of out-sample R-squared test and computation of various loss functions.
The research outcomes underscore the significant impact of diverse uncertainty factors such as domestic economic policy uncertainty (EPU), global EPU (GEPU), US EPU and geopolitical risk (GPR) on long-run volatility of Indian energy and agriculture (agri) futures. Additionally, the study demonstrates that GPR exhibits superior predictive capability for crude oil futures volatility, while domestic EPU stands out as an effective predictor for agri futures, particularly castor seed and guar gum.
The study offers practical implications for market participants and policymakers to adopt a comprehensive perspective, incorporating diverse uncertainty factors, for informed decision-making and effective risk management in commodity markets.
The research makes an inaugural attempt to examine the impact of domestic and global uncertainty indicators on modelling and predicting volatility in energy and agri futures. The distinctive feature of considering an emerging market also adds a novel dimension to the research landscape.
This paper aims to examine the impacts of macroprudential policy on the shadow economy worldwide.
We compile a panel dataset covering 125 countries from 1990 to 2018. This paper mitigates potential endogeneity issues via two-stage least squares and the two-step generalized method of moments (GMM).
The robust results show that the overall tightening of macroprudential policies exerts an expansion impact on the shadow economy. Further examination of the 16 individual macroprudential policy instruments finds that loan restrictions, countercyclical buffers, surcharges for systemically important financial institutions and capital conservation buffers have positive and statistically significant effect on the shadow economy. This relationship is only present during tightening episodes of macroprudential policy as loosening episodes do not exhibit any significant impact. Finally, this paper documents the nonlinear effects of macroprudential policy.
The results suggest that the supervisory authorities may need to consider another parameter, which is the development of the shadow economy, when devising the optimal macroprudential policy responses.
To the best of the authors’ knowledge, this paper is likely the first to empirically document the impact of macroprudential policy on the shadow economy. It contributes to the growing literature on the potential side effects of macroprudential policy on the macro-economy.
This research investigates the complex relationship between economic policy uncertainty (EPU), energy consumption and institutional factors in the Gulf region. The purpose of this study is to examine how institutional factors moderate the impact of EPU on energy consumption in Gulf countries.
This paper uses the dynamic panel autoregressive distributed lag (PARDL) method, over a period stretching from 1996 to 2021 in the Gulf countries.
The results show that, only in the long term, EPU has a positive and significant impact on energy consumption, suggesting that increased EPU leads to increased energy use. Furthermore, this study found that, only in the long term, government effectiveness and regulatory quality have positive and significant effect on energy consumption. Accordingly, the two institutional factors play a moderating role in the EPU−energy consumption nexus.
This study highlights the importance of considering the time dimension when formulating energy and economic policies in Gulf countries. Policymakers should take into consideration the nature of these relationships to make informed decisions that promote energy efficiency and economic stability in the region.
To the best of the authors’ knowledge, this is the first study examining the relationship between EPU and energy consumption in the Gulf countries while incorporating the role of institutional factors as potential mediators.
Financial inclusion is acknowledged as a critical facilitator of the United Nations Sustainable Development Goals agenda for 2030. Therefore, this study aims to examine the asymmetric role of overall globalization on financial inclusion by controlling economic growth, urbanization and population for the selected South Asian countries.
Applying the nonlinear autoregressive distributed lag approach to cointegration explores the impact of overall globalization on financial inclusion in the presence of additional variables like economic growth, urbanization and population in the designed financial inclusion function.
The estimated econometric outcomes show that increasing overall globalization fosters financial inclusion while decreasing overall globalization reduces financial inclusion. Furthermore, a positive (negative) change in economic growth leads to an increase (decrease) in financial inclusion while varying short-run findings. Moreover, both positive and negative changes increase financial inclusion in the long run in connection with urbanization. Although the short-run results are not significant, the study finds that an increase (decrease) in population leads to a decrease (increase) in financial inclusion. Finally, to support the promotion of financial inclusivity throughout South Asia, several policies pertaining to financial inclusion are suggested.
To the best of the authors’ knowledge, this is the first study to examine the asymmetries related to overall globalization on financial inclusion by controlling economic growth, urbanization and population.
This paper aims to investigate the effects of macroprudential policies in Brazil on the banking sector.
Autoregressive models with distributed lags (ADL) are estimated to verify whether such regulatory measures affected the volume of credit, the banking spread and the concentration index of the five largest Brazilian banks. In addition to the variables of interest, monthly macroeconomic data from 2011 to 2021 are considered.
Our results suggest that macroprudential policies are effective in reducing credit volume. More importantly, our findings highlight two possible adverse effects of these instruments. Firstly, macroprudential tightenings are associated with increases in bank spread. Secondly, tightening measures contribute to increasing bank market concentration.
These findings are useful for the scientific literature that investigates the regulation of the financial system by providing empirical evidence of the effects of Brazilian macroprudential measures on investors, policymakers and other economic agents whose well-being is associated with economic stability.
This paper aims to examine the long-run relationship between stock market development and Nigerian economic growth from 1980 to 2020.
Market capitalization, number of listed companies, total value traded ratio and turnover ratio are used. An autoregressive distributed lag model is used for the analysis.
The market capitalization ratio and turnover ratio have positively significant links with economic growth. The number of listed companies has a negative and non-significant impact on economic growth. Total value traded ratio has a negatively significant link with economic growth in the short run. The positive but insignificant relationship between traded value ratio and turnover ratio in the long run growth means that the Nigerian stock market is growth inducing and on the right track as stock market liquidity drives growth.
The government and Security Exchange Commission should increase the market liquidity level by improving the trading infrastructure. The government and regulatory authorities should improve and effectively implement the existing policies that would ensure stock market growth. This facilitates the investors’ speed to purchase and sell shares. The Securities and Exchange Commission should reduce transaction costs to encourage active trading activities. The market should be diversified with investment instruments such as derivatives, futures and swap options which would limit the adverse effect of listed companies in the market. To increase the stock market liquidity, the Security and Exchange Commission should apply moral suasion to bring private companies that have met certain financial thresholds to convert to public companies. Government should improve on the legislation to encourage more private companies to list on the stock exchange.
The study findings add value in that stock market development has a positive impact on economic growth in Nigeria.
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