Financial Deepening in Economic Development.

Cole, David C.; Shaw, Edward S.

doi:10.2307/2978421

Cited by 28 publications

(23 citation statements)

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“…Quite the contrary, they thrived in the new environment. Credit unions in Costa Rica did not seem to be condemned to be marginal players in the financial sectors, being punished for their smaller size, at least during the period under examination, a possibility suggested by Cole (1974). This finding is consistent with results from Ory et al (2006), who found that CUs and banks owned by CUs in France had fared well over the years 1990-2002, despite the deregulation of the industry that had been taking place in the country.…”

Section: Rojas Deschênes Ramboarisata and Leclerc (2018)mentioning

confidence: 99%

“…The topic deserves analysis because it can give important insights that are useful to both the makers of policy and the managers of credit unions. David Cole (1974), in an early criticism of the financial-repression school, contended that reforming the financial sector, in the sense of freeing it to market forces as advocated by Edward Shaw (1973), could be unwarranted if there are no reasonable prospects that reform will serve the general interest. Cole reasoned that financial liberalization could result in increasing the number of financial resources in the economy.…”

Section: Table 1: Date Of Creation Of Credit Unions Regulated By Sugementioning

confidence: 99%

“…However, society at large can only benefit from these additional resources if many competitive financial institutions disperse and regulate power through market forces. Cole (1974) considers the latter outcome unlikely in the real world, because, "Banking is an industry where costs decrease and influence increases with scale, resulting in a strong tendency toward consolidation and oligopoly" (p. 1,348). Athanasios Noulas, Subhash Ray, and Stephen Miller (1990) found empirical evidence in the United States of the presence of economies of scale in the banking industry.…”

Section: Table 1: Date Of Creation Of Credit Unions Regulated By Sugementioning

confidence: 99%

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The competitive edge of credit unions in Costa Rica: From financial repression to the risks of a new financial environment

Rojas

Deschênes

Ramboarisata

et al. 2019

CJNSER

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This article argues that financial repression played a key role in the emergence of credit unions (CUs) in Costa Rica, along with other institutional factors. Credit unions took advantage of the opportunity to serve borrowers whose requests had been refused by banks. Given the sweeping reforms of the Costa Rican financial system aimed at reducing the scope of financial repression, this article poses the question of how those reforms impacted the competitiveness of CUs. Previous literature suggests that financial reform may lead to concentration in the financial sector, and not to the promotion of a more competitive environment. This article presents data showing that CUs in Costa Rica exhibited an enhanced ability to gain market share and also provides an explanation for the observed trend.RÉSUMÉL’article soutient que la répression financière avec d’autres facteurs institutionnels a joué un rôle clé dans l’émergence des coopératives financières (CF) au Costa Rica. Les CF ont profité de l’occasion pour servir les emprunteurs dont les demandes avaient été refusées par les banques. Compte tenu des réformes radicales du système financier costaricien, visant à réduire l’étendue de la répression financière, l’article pose la question de l’incidence de ces réformes sur la compétitivité des CF. La littérature précédente suggère que la réforme financière peut conduire à une concentration du secteur financier et non à la promotion d’un environnement plus compétitif. Notre article démontre que les CF du Costa Rica présentent une capacité à accroître leurs parts de marché. Nous fournissons une explication de la tendance observée.

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Section: Rojas Deschênes Ramboarisata and Leclerc (2018)mentioning

confidence: 99%

Section: Table 1: Date Of Creation Of Credit Unions Regulated By Sugementioning

confidence: 99%

Section: Table 1: Date Of Creation Of Credit Unions Regulated By Sugementioning

confidence: 99%

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The competitive edge of credit unions in Costa Rica: From financial repression to the risks of a new financial environment

Rojas

Deschênes

Ramboarisata

et al. 2019

CJNSER

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“…However, on the other hand, there are studies (Patrick, 1966;Stern, 1989;Ram, 1999;Akinboade, 2000;Favara, 2003;Majid and Mahrizal, 2007;Demetriades and James, 2011;Nain andKamaiah, 2014 and which do not agree to this view and have rejected any causal role for financial development in the growth process. If this contrasting argument is the accurate depiction of reality, then all the policy work and efforts to encourage financial development would be premature and in fact will lead to uneconomical use of limited resources.…”

Section: Introductionmentioning

confidence: 99%

Dynamics of Financial Development and Economic Growth: Panel Data Analysis for Selected Indian States

Sharma

Kumar

2018

DEM

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With the help of standard refined panel analysis techniques the present study analysed the dynamics of causal relationship between financial development and economic growth for selected Indian states. Mainly focusing on banking level indicators the present attempt measured the extent of financial development in the selected Indian states. Three major econometric techniques including panel unit root tests, cointegration tests and finally the panel error correction model have been implemented for identifying the relationship between variables. Firstly, the series was tested for cross-sectional independence and then checked for the presence of unit roots. The results of both first and second generation unit root indicated an integration of order one for all the variables and a long-run relationship between financial development and respective economic growth indicators was confirmed by the Pedorni's and Westerlund's cointegration tests. The results of the present study emphasized on the critical role of credit provided by banks in the process of long run economic growth across states. Apart from this the results of the study highlighted a very relevant fact that the Indian economy has a lot of scope in harvesting the less financially developed areas of the states which can run rapidly on the greeny path of dynamic and sharp long term sustainable economic growth.

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“…It confirms financial deepening as the candidate for the threshold effect in the finance-growth relationship. Excess financial depth has severally been reported as the source of reversal in growth after a given threshold value inCole (1974);Darrat (1999);Rousseau and Wachtel (2011);Cecchetti and Kharroubi (2012); andBhattarai (2015).…”

mentioning

confidence: 99%

Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria

Ou¹,

Alagidede²

2018

Preprint

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The relationship between economic growth, growth volatility and financial sector development continues to attract attention in the theoretical and empirical literature. Over time, some studies hypothesize that finance has a causal linear relationship with growth. Recently several other authors contradict this claim and argue that the relationship that exists between finance and growth is nonlinear. We investigate these claims for Nigeria for the period between 1970 and 2015, using semi-parametric econometric methods, Hansen sample splitting techniques and threshold estimator. We observed no evidence of ‘Too much finance’ as claimed by many researchers in recent times. We show that the relationship between financial development and economic growth is U-shaped. This is equally true for the relationship between financial development and growth volatility. We also discuss policy implications of our findings and recommend financial innovations and decentralization of stock exchanges to boost access to financial services, in addition, improved regulation to enhance financial market efficiency.

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Financial Deepening in Economic Development.

Cited by 28 publications

References 0 publications

The competitive edge of credit unions in Costa Rica: From financial repression to the risks of a new financial environment

The competitive edge of credit unions in Costa Rica: From financial repression to the risks of a new financial environment

Dynamics of Financial Development and Economic Growth: Panel Data Analysis for Selected Indian States

Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria

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