T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.001.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian ...
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This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian economy and the fact that majority of production organizations especially in the unorganized segment are yet to have access to the formal financial system. Financial access is considered in terms of actual use of one of the financial services, that is, supply of financial resources for productive investment purpose. The study measures financial access in terms of availability of finances from the formal financial institutions and their adequacy in taking care of productive investment needs. Adequacy of finances is assessed through financial resource gap, that is, proportion of productive investment that is not funded by the formal financial institutions. Availability and adequacy of resources from the formal financial system is analysed at different levels of aggregation: household, sector (agriculture, industry and services), segment (unorganized and organized), and economy. Industry and services sectors are divided into organized and unorganized segments given their differential access to the formal financial system and financial access is computed separately for the two segments. In addition, the study compares India with selected countries (Brazil, China, and United Kingdom) and within India it compares private sector banks with public sector banks. Finally, it provides policy recommendations.Less
This study focuses on the state of financial access in post-reform India. It is analysed from the macroeconomic growth perspective keeping in view the importance of rapid growth for the Indian economy and the fact that majority of production organizations especially in the unorganized segment are yet to have access to the formal financial system. Financial access is considered in terms of actual use of one of the financial services, that is, supply of financial resources for productive investment purpose. The study measures financial access in terms of availability of finances from the formal financial institutions and their adequacy in taking care of productive investment needs. Adequacy of finances is assessed through financial resource gap, that is, proportion of productive investment that is not funded by the formal financial institutions. Availability and adequacy of resources from the formal financial system is analysed at different levels of aggregation: household, sector (agriculture, industry and services), segment (unorganized and organized), and economy. Industry and services sectors are divided into organized and unorganized segments given their differential access to the formal financial system and financial access is computed separately for the two segments. In addition, the study compares India with selected countries (Brazil, China, and United Kingdom) and within India it compares private sector banks with public sector banks. Finally, it provides policy recommendations.
Hugh Patrick
- Published in print:
- 1995
- Published Online:
- August 2004
- ISBN:
- 9780198288992
- eISBN:
- 9780191601224
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/0198288999.003.0011
- Subject:
- Economics and Finance, Financial Economics, South and East Asia
This chapter examines issues in the design of good financial systems for developing markets and transforming socialist economies (TSEs) based on the Japanese experience. The effective transfer of the ...
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This chapter examines issues in the design of good financial systems for developing markets and transforming socialist economies (TSEs) based on the Japanese experience. The effective transfer of the Japanese main bank system will depend on the financial architecture and policies being pursued in the transferring country. Developing economies and TSEs should take note of the following points: that the Japanese degree of financial repression was modest, real interest rates and other incentives were positive, there was competition, credit allocation was based on objective, efficiency-based criteria without outside interference, and corruption was low.Less
This chapter examines issues in the design of good financial systems for developing markets and transforming socialist economies (TSEs) based on the Japanese experience. The effective transfer of the Japanese main bank system will depend on the financial architecture and policies being pursued in the transferring country. Developing economies and TSEs should take note of the following points: that the Japanese degree of financial repression was modest, real interest rates and other incentives were positive, there was competition, credit allocation was based on objective, efficiency-based criteria without outside interference, and corruption was low.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0002
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 2 reviews the literature to understand the relation (theoretical as well as empirical) between financial development and economic growth, and discusses the concepts of financial development ...
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Chapter 2 reviews the literature to understand the relation (theoretical as well as empirical) between financial development and economic growth, and discusses the concepts of financial development and financial access. This chapter also provides a broad conceptual base on which the methodology of the study is specified to analyse the basic issues. Theoretical arguments and empirical studies show that financial development plays a critical role in enhancing economic growth. The concept of financial development goes beyond passive financial intermediation and is viewed in terms of diversity of financial institutions and instruments, physical outreach of the financial system, and coverage of real sector activities. The concept of financial access or financial inclusion is taken broadly as availability of financial services to all without any barriers—price and non-price.Less
Chapter 2 reviews the literature to understand the relation (theoretical as well as empirical) between financial development and economic growth, and discusses the concepts of financial development and financial access. This chapter also provides a broad conceptual base on which the methodology of the study is specified to analyse the basic issues. Theoretical arguments and empirical studies show that financial development plays a critical role in enhancing economic growth. The concept of financial development goes beyond passive financial intermediation and is viewed in terms of diversity of financial institutions and instruments, physical outreach of the financial system, and coverage of real sector activities. The concept of financial access or financial inclusion is taken broadly as availability of financial services to all without any barriers—price and non-price.
Wendy Dobson
- Published in print:
- 2007
- Published Online:
- January 2008
- ISBN:
- 9780199235216
- eISBN:
- 9780191715624
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199235216.003.0007
- Subject:
- Economics and Finance, Development, Growth, and Environmental
This chapter notes the special role of financial services in an economy and distinguishes policy reform from domestic deregulation and capital account deregulation. The impacts of policy reform and ...
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This chapter notes the special role of financial services in an economy and distinguishes policy reform from domestic deregulation and capital account deregulation. The impacts of policy reform and the benefits and risks of broader financial sector development, growth, income distribution, and poverty are discussed. The impacts of reform include: increased domestic competition; causing further reform and greater regulatory transparency; increased resiliency of the domestic financial system to shocks; encouragement of the diffusion of new skills, products and technologies; and facilitation of access to international capital. The elements of successful trade-policy reform are noted, based on the experiences of China, Thailand, and Latin America. Issues in need of additional research are identified, including the impact on domestic financial performance of foreign equity participation, improvement of available data on and transparency of barriers to cross-border transactions and foreign entry, measures used to moderate unanticipated impacts of liberalization, and further elucidation of the rationales for the WTO Financial Services Agreement (FSA) commitments. The role of international negotiations is addressed in terms of how they can help individual countries, what can be learned from international rules and commitments undertaken, whether there is scope for improvement, whether existing commitments promote desirable policies, possible reasons for refraining from commitments, and issues in need of further research. An addendum reviews the liberalization of financial services in the Western Hemisphere and in China.Less
This chapter notes the special role of financial services in an economy and distinguishes policy reform from domestic deregulation and capital account deregulation. The impacts of policy reform and the benefits and risks of broader financial sector development, growth, income distribution, and poverty are discussed. The impacts of reform include: increased domestic competition; causing further reform and greater regulatory transparency; increased resiliency of the domestic financial system to shocks; encouragement of the diffusion of new skills, products and technologies; and facilitation of access to international capital. The elements of successful trade-policy reform are noted, based on the experiences of China, Thailand, and Latin America. Issues in need of additional research are identified, including the impact on domestic financial performance of foreign equity participation, improvement of available data on and transparency of barriers to cross-border transactions and foreign entry, measures used to moderate unanticipated impacts of liberalization, and further elucidation of the rationales for the WTO Financial Services Agreement (FSA) commitments. The role of international negotiations is addressed in terms of how they can help individual countries, what can be learned from international rules and commitments undertaken, whether there is scope for improvement, whether existing commitments promote desirable policies, possible reasons for refraining from commitments, and issues in need of further research. An addendum reviews the liberalization of financial services in the Western Hemisphere and in China.
Philippe Aghion and Abhijit Banerjee
- Published in print:
- 2005
- Published Online:
- January 2007
- ISBN:
- 9780199248612
- eISBN:
- 9780191714719
- Item type:
- book
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199248612.001.0001
- Subject:
- Economics and Finance, Development, Growth, and Environmental
It has long been recognized that productivity growth and the business cycle are closely interrelated. Yet, until recently, the two phenomena have been investigated separately in the economics ...
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It has long been recognized that productivity growth and the business cycle are closely interrelated. Yet, until recently, the two phenomena have been investigated separately in the economics literature. This book provides the first consistent attempt to analyze the effects of macroeconomic volatility on productivity growth, and also the reverse causality from growth to business cycles. It shows that by looking at the economy through the lens of private entrepreneurs, who invest under credit constraints, one can go some way towards explaining persistent macroeconomic volatility and the effects of volatility on growth. Beginning with an analysis of the effects of volatility on growth, it argues that the lower the level of financial development in a country, the more detrimental the effect of volatility on growth. This prediction is confirmed by cross-country panel regressions. The data also suggest that a fixed exchange rate regime or more countercyclical budgetary policies are growth-enhancing in countries with a lower level of financial development. The former reduce aggregate volatility whereas the latter reduce the negative effects of volatility on long-term productivity-enhancing investment by firms. The book concludes with an investigation into how the interplay between credit constraints and pecuniary externalities is sufficient to generate persistent business cycles and to explain the occurrence of currency crises.Less
It has long been recognized that productivity growth and the business cycle are closely interrelated. Yet, until recently, the two phenomena have been investigated separately in the economics literature. This book provides the first consistent attempt to analyze the effects of macroeconomic volatility on productivity growth, and also the reverse causality from growth to business cycles. It shows that by looking at the economy through the lens of private entrepreneurs, who invest under credit constraints, one can go some way towards explaining persistent macroeconomic volatility and the effects of volatility on growth. Beginning with an analysis of the effects of volatility on growth, it argues that the lower the level of financial development in a country, the more detrimental the effect of volatility on growth. This prediction is confirmed by cross-country panel regressions. The data also suggest that a fixed exchange rate regime or more countercyclical budgetary policies are growth-enhancing in countries with a lower level of financial development. The former reduce aggregate volatility whereas the latter reduce the negative effects of volatility on long-term productivity-enhancing investment by firms. The book concludes with an investigation into how the interplay between credit constraints and pecuniary externalities is sufficient to generate persistent business cycles and to explain the occurrence of currency crises.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0003
- Subject:
- Economics and Finance, Macro- and Monetary Economics
This chapter describes the process of financial development and access, and the various dimensions of each of the two concepts, and how it leads to economic growth and development. It elaborates on ...
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This chapter describes the process of financial development and access, and the various dimensions of each of the two concepts, and how it leads to economic growth and development. It elaborates on the macroeconomic growth approach and underlying rationale for adopting this approach. Keeping the productive investment requirements of growth in mind, financial development is specified along the dimensions of diversification, size, reach, efficiency and soundness. Financial access is specified as the use of formal financial resources in relation to actual productive investment undertaken by the economic agents/sectors/segments. Further, the use of formal financial system is examined in terms of availability and adequacy of formal financial resources. Adequacy is measured as gap between the need and availability, which the study terms as financial resource gap.Less
This chapter describes the process of financial development and access, and the various dimensions of each of the two concepts, and how it leads to economic growth and development. It elaborates on the macroeconomic growth approach and underlying rationale for adopting this approach. Keeping the productive investment requirements of growth in mind, financial development is specified along the dimensions of diversification, size, reach, efficiency and soundness. Financial access is specified as the use of formal financial resources in relation to actual productive investment undertaken by the economic agents/sectors/segments. Further, the use of formal financial system is examined in terms of availability and adequacy of formal financial resources. Adequacy is measured as gap between the need and availability, which the study terms as financial resource gap.
Thomas B. Pepinsky
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780199643097
- eISBN:
- 9780191741944
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199643097.003.0009
- Subject:
- Business and Management, Political Economy, International Business
Financial development in the emerging economies of Southeast Asia varies substantially. These differences have persisted for decades, despite broadly similar policy reforms since the 1980s. This ...
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Financial development in the emerging economies of Southeast Asia varies substantially. These differences have persisted for decades, despite broadly similar policy reforms since the 1980s. This chapter surveys the history of financial development in Indonesia, Malaysia, the Philippines, and Thailand in order to explain the origins of cross-national variation in patterns of financial development as well as the changes in national financial systems in Southeast Asia since the late 1980s. Drawing attention to the political origins of financial policy, the chapter makes two central claims. First, variation in the political exigencies facing postcolonial regimes explains the variation in the financial systems that they constructed. Second, common pressures from international financial markets prompted governments to experiment with financial liberalization beginning in the 1980s, but the particular configurations of political and economic power in each country have shaped how these experiments have played out in terms of actual institutional and regulatory changes.Less
Financial development in the emerging economies of Southeast Asia varies substantially. These differences have persisted for decades, despite broadly similar policy reforms since the 1980s. This chapter surveys the history of financial development in Indonesia, Malaysia, the Philippines, and Thailand in order to explain the origins of cross-national variation in patterns of financial development as well as the changes in national financial systems in Southeast Asia since the late 1980s. Drawing attention to the political origins of financial policy, the chapter makes two central claims. First, variation in the political exigencies facing postcolonial regimes explains the variation in the financial systems that they constructed. Second, common pressures from international financial markets prompted governments to experiment with financial liberalization beginning in the 1980s, but the particular configurations of political and economic power in each country have shaped how these experiments have played out in terms of actual institutional and regulatory changes.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0001
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. ...
More
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. This chapter states the basic research objectives of the study: assessment of the state of financial development and financial access in the post-reform period in India, and two extensions of these objectives, namely, international comparison of specified aspects of the Indian financial sector and the extent of private sector participation. The chapter notes the special features of the study, including macroeconomic growth approach and assessment of financial access in terms of availability and adequacy of financial resources from the formal financial system for the productive investment purpose at different levels of economy.Less
Chapter 1 begins with the overview of the financial sector policies—pre- and post-reform India. In the background of policy reforms, it presents the research issues and salient features of the study. This chapter states the basic research objectives of the study: assessment of the state of financial development and financial access in the post-reform period in India, and two extensions of these objectives, namely, international comparison of specified aspects of the Indian financial sector and the extent of private sector participation. The chapter notes the special features of the study, including macroeconomic growth approach and assessment of financial access in terms of availability and adequacy of financial resources from the formal financial system for the productive investment purpose at different levels of economy.
T.A. Bhavani and N.R. Bhanumurthy
- Published in print:
- 2012
- Published Online:
- September 2012
- ISBN:
- 9780198076650
- eISBN:
- 9780199081868
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780198076650.003.0007
- Subject:
- Economics and Finance, Macro- and Monetary Economics
Chapter 7 makes international comparison of some of the specified aspects of Indian financial system for the most recent years using data from the Financial Development Report 2009 and Financial ...
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Chapter 7 makes international comparison of some of the specified aspects of Indian financial system for the most recent years using data from the Financial Development Report 2009 and Financial Access 2009. United Kingdom (UK), Brazil and China are selected for the purpose of comparison in view of their level of development in general and financial system in particular. Evidence indicates that the Indian financial system is the smallest—both in depth and breadth—among the four selected countries in majority of the indicators considered in the study. Despite numerous policy measures to enhance financial access India is lagging behind Brazil in terms of access to financial services. This comparison only reemphasizes the need for furthering financial sector reforms in India.Less
Chapter 7 makes international comparison of some of the specified aspects of Indian financial system for the most recent years using data from the Financial Development Report 2009 and Financial Access 2009. United Kingdom (UK), Brazil and China are selected for the purpose of comparison in view of their level of development in general and financial system in particular. Evidence indicates that the Indian financial system is the smallest—both in depth and breadth—among the four selected countries in majority of the indicators considered in the study. Despite numerous policy measures to enhance financial access India is lagging behind Brazil in terms of access to financial services. This comparison only reemphasizes the need for furthering financial sector reforms in India.
Peter Temin and Hans-Joachim Voth
- Published in print:
- 2013
- Published Online:
- January 2013
- ISBN:
- 9780199944279
- eISBN:
- 9780199980789
- Item type:
- chapter
- Publisher:
- Oxford University Press
- DOI:
- 10.1093/acprof:oso/9780199944279.003.0001
- Subject:
- Economics and Finance, Economic History
The book asks when financial development is good for growth. It turns to industrializing England for an answer, using London goldsmith bankers as a case study. The book traces the early history of ...
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The book asks when financial development is good for growth. It turns to industrializing England for an answer, using London goldsmith bankers as a case study. The book traces the early history of domestic banking in eighteenth-century London. It reveals how goldsmiths learned to be bankers in the tumultuous early years of the century, how a few of them prospered in the South Sea Bubble, and how the banks operated after mid-century. Financial repression by the government—a response to the pressing need to finance ever longer and more expensive wars—was a key constraint for private financial development. The usury laws restricted the ability to lend; war-time borrowing shocks crowded out private loans. Based on new evidence from historical bank archives, especially those of Hoare's Bank, the authors compile a rich new dataset with micro-level information on lending decisions, cash ratios, and profitability. Their conclusions shed light on one of the great unsolved puzzles of the Industrial Revolution—if technological change was fast, why was growth itself slow? Their answer emphasizes the important difficulties thrown up the institutional context in Hanoverian England—a “warfare state” bent on repressing financial development to facilitate its access to private savings.Less
The book asks when financial development is good for growth. It turns to industrializing England for an answer, using London goldsmith bankers as a case study. The book traces the early history of domestic banking in eighteenth-century London. It reveals how goldsmiths learned to be bankers in the tumultuous early years of the century, how a few of them prospered in the South Sea Bubble, and how the banks operated after mid-century. Financial repression by the government—a response to the pressing need to finance ever longer and more expensive wars—was a key constraint for private financial development. The usury laws restricted the ability to lend; war-time borrowing shocks crowded out private loans. Based on new evidence from historical bank archives, especially those of Hoare's Bank, the authors compile a rich new dataset with micro-level information on lending decisions, cash ratios, and profitability. Their conclusions shed light on one of the great unsolved puzzles of the Industrial Revolution—if technological change was fast, why was growth itself slow? Their answer emphasizes the important difficulties thrown up the institutional context in Hanoverian England—a “warfare state” bent on repressing financial development to facilitate its access to private savings.
