Financial Intermediary Development Research Articles

Paths for the development of financial intermediation in industry 5.0: Opportunities for developing economies (On the example of former USSR republics)

Currently, there is a unique situation in the global economy, industrial eras coexist together, there is interaction and transformation of financial systems simultaneously within the framework of Industry 4.0 and Industry 5.0. New, digital resources are entering the economy, intellectual capital is becoming virtual, artificial intelligence is increasingly finding its application in the structure of financial support. Financial intermediation in developing countries is also subject to global trends, the active development of new instruments for developing economies is especially important. The aim of the study is to identify effective ways to develop financial intermediation in Industry 5.0 for the economies of developing countries. Based on the results of the study on the development of financial institutions mediation revealed a problem related to the lack of reasonable tools that could be used to improving the efficiency of the financial intermediaries market, proposed the main directions of such a process: mobilization of savings, distribution financial assets, payment system, risk management and control over market agents involved in financial operations.

Features of the development of banking

The paper examines the theoretical and practical aspects of the development of banking. The authors made an attempt to identify a new round of development of financial intermediaries, due to the main trends of digitalization. The relevance of the research topic of the development of banking business directions lies in the transformation of the appearance of financial services and the transition to the digital economy. The formation of digital ecosystems allows banks to expand their customer base, increase the availability and quality of services provided, and reduce costs. Based on the analysis, modern features of the functioning of institutions were identified, difficulties in introducing digital technologies and ways to solve them were identified.

Spatial disparity of skill premium in China: The role of financial intermediation development

In China, the relative wages of high-skilled and low-skilled workers display huge variation across different regions. We examine whether financial intermediation development (FID) can explain such variation. Conceptually, better-developed financial intermediation helps financially-constrained firms raise new capital, which is usually skill-biased, resulting in an increased demand for skilled labor and skill premium. Using a cross-section of workers from the 1% Population Survey of 2005, we find consistent evidence; besides, the relationship is stronger among workers in industries with higher capital-skill complementarity and in non-state-owned enterprises. Overall, our results suggest that the financial market plays a role in explaining skill premium in China.

Macroeconomic Factors of Stock Market Development (The Case of Saudi Arabia)

Most economists recognize that a healthy capital market can enhance economic growth. In 2016, Saudi Arabia launched Vision 2030, and the Financial Sector Development Program is part of the Vision. The program aims to achieve economic diversification, reduce oil dependence, and trigger economic growth. Capital market development has an integral part to play in achieving Vision 2030 goals. For this reason, it is essential to investigate the factors that could influence it. The literature on the impact of macroeconomic factors on the stock market development is inconclusive; thus, it is difficult to generalize the outcome of previous studies. This research investigates the macroeconomic and institutional determinants of stock market development in Saudi Arabia from 2008 to 2021 by using a multiple linear regression approach. Following previous research, our analysis explores the impact of several factors, including Global Trade Openness, Market Depth, Macroeconomic Stability, Control of Corruption, Income level, Private capital flows, Financial intermediary development, Economic Development, Domestic Savings and investment. Among the nine evaluated factors, only four were significant. We find that the determinants of stock market development in Saudi Arabia are Economic Development, Income level, Control of corruption, and Market Depth.

СУЧАСНІ АСПЕКТИ ДІЯЛЬНОСТІ НЕБАНКІВСЬКОГО ФІНАНСОВОГО СЕКТОРУ

The national economy is in dire need of long-term investments. The economic stability of the state in modern conditions depends on the effective operation of banking institutions and the non-banking financial sector, and in this matter such institutions as: non-state pension funds, insurance companies, leasing institutions, etc., could provide significant assistance. In the wartime period, their role is most obvious, since the level of such macroeconomic indicators as: real GDP growth, unemployment rate, inflation rate, balance of payments depends on the development of non-bank financial intermediaries. An important feature for the formation of funds of the non-banking sector is the fact that the funds are formed, firstly, on contractual terms, and secondly, on the terms of the sale of securities. The purpose of the article is to study the activities of institutions of the non-banking financial sector, analyze their impact on the investment of industrial enterprises, and develop proposals for intensifying their participation in investment processes. The theoretical and methodological basis of the research is the work of domestic and foreign scientists in the field of determining the peculiarities of the functioning of enterprises of the non-banking financial sector. The information base consists of scientific, economic and reference literature, works of leading domestic and foreign scientists, methodical materials, information portals, Ukrainian periodicals. A set of methods and approaches were used: system analysis, theoretical generalization, methods of analysis and synthesis. In the article, the author states the importance of researching the theoretical and methodological foundations of the functioning of non-banking financial institutions. An analysis of the legislative framework regulating the activities of enterprises of the non-banking sector has been carried out, characteristic features inherent in each of the individual types of these institutions have been highlighted. The structure and dynamics of investments in the economy of Ukraine over the past ten years have been studied. The dynamics of the number and economic activity of enterprises of the non-banking financial sector have been analyzed. The scientific novelty consists in deepening the essence and researching the dynamics of increasing the investment potential of the non-banking financial sector, which, in contrast to existing research, emphasizes the special relevance of the development of this sector of the economy of Ukraine during the martial law and post-war reconstruction, and also takes into account the international

Financial intermediation, inclusion, Fintech, and income inequality in Africa: Robust evidence from the supply and demand side data

AbstractThe current literature on the finance‐inequality nexus fall short of providing extensive evidence. This paper fills the gap by framing the financial sector; to the development of financial intermediation (supply side) and individual use of financial services (demand side). The first approach decouples the financial sector into the banking and stock market. We use the 5‐year nonoverlapping averaged data from 1980 to 2017 across 49 countries and employ a panel data fixed effect and two‐stage least squared estimation (2sls). We show that banking and stock market development widens income inequality. Besides, the effect is more prominent in countries that have a banking and stock market than countries only with the banking sector. The second approach uses financial inclusion and financial technology (Fintech) data from three waves of survey data in 2011, 2014 and 2017 on the individual use of financial services across 39 countries. We obtain three key findings. First, institutional quality significantly affects financial inclusion and Fintech. Second, Fintech positively affects inclusion and savings. Third, financial inclusion and Fintech exacerbate income inequality. Our result asserts a natural tendency that financial sector development exacerbate income inequality in Africa.

Current trends in the development of financial intermediary in the context of military challenges: the Ukrainian case

Introduction. The current situation on the financial market of Ukraine, in the conditions of military challenges, depends not only on financial and economic factors, but also on social, political and security factors. The war defines non-typical rules for the functioning of both financial intermediaries and the financial market in general. Safety of all participants and creation of conditions for access to financial services in conditions of fragility of the financial intermediation system became the main dominant factors. And this, in turn, requires the rapid reorientation of financial intermediaries to remote communication channels, digitization of services, flexible policy in the field of regulation, the search for new alternative sources of replenishment of resources, ensuring financial stability and liquidity, the search for new tools, quick response to challenges related to with wartime activities. All of the above causes considerable pressure on the functioning of financial intermediaries, who are responsible for their financial stability. Goal. Elucidation of the main factors affecting the state of the financial market in the conditions of military challenges; analysis of the real state of financial intermediaries and generalization of factors and reasons for the reduction of market activity and the fragility of systems and financial intermediation; justification of the need to change the policy of prudential supervision; identification of the potential and channels for the introduction of financial innovations to improve the market; outline of the main trends in the development of financial intermediaries in the post-war period. Results. It was found that financial intermediaries in Ukraine work during the period of "shock" challenges caused by wartime. It is shown that their activities are aimed at introducing financial innovations and ensuring stable access of consumers to all financial services. The pragmatism of the functioning of financial intermediaries in the financial services market, their real state, the problems of activity and state regulation are revealed, the challenges faced by financial market participants in the wartime period are emphasized. It is argued that in the conditions of the fragility of the financial intermediation system, ensuring the sustainability and stability of the activity of financial intermediaries, their effective activity, openness and transparency has an important place. The importance of inclusiveness in the activities of financial intermediaries has been demonstrated. It is proven that military challenges became a systemic determinant of the "cleansing" of the financial market, forcing a part of financial intermediaries (usually from the market of non-banking financial institutions) to make a difficult but responsible decision - to leave the market. Under such circumstances, it is important for the state regulator to take preventive measures aimed at supporting this sector of the financial market. Another challenge is operating in conditions of total economic decline and lack of financial resources to fulfill the obligations assumed. Financial intermediaries are ready to make concessions and soften the terms of obligations, however, there should be counter-steps in the system of regulatory policy to create soft rules and requirements in war conditions (reducing the level of provisioning for overdue loans, canceling the norm of the ratio of productive and non-productive assets, the level of profitability and softening of other activity indicators for the period of the war and the determination of a specific and adequate period of recovery in the post-war period). Conclusions. Based on the results of the conducted research, the following conclusions were drawn: new trends are crystallizing in the financial market of Ukraine and in the system of financial intermediation; the issues of introducing technologies for remote and asynchronous access to services provided by financial intermediaries into the activities of financial intermediaries are updated; military challenges cause serious changes in the configuration of the financial market, both in terms of the segmentation of financial intermediaries, and in terms of the introduction of innovations in the financial intermediation system.

Credit and financial mediation

Introduction. The article is devoted to the study of the theoretical and methodological aspects of the analysis of the innovative strategy of credit creation by financial intermediaries, the analysis of the current state and prospects of its development, and the developed areas of improvement of the modern strategy of creation of credit by financial intermediaries in the conditions of the development of Ukraine. The work examines the content and features of the activity of credit created by financial intermediaries, provides a description of the methods of quantitative analysis of its current activity, and investigates the methods of qualitative analysis of development prospects. Purpose. The purpose of the article is the organization of modern lending activities by financial intermediaries on the financial market, effective management of credit relations, implementation of various types of modern lending taking into account its important specifics during the development of financial intermediation. Method (methodology). Solving the set tasks is carried out with the help of methods of assessment and analysis of risks and efficiency of functioning, assessment of financial and economic indicators of commercial bank activity, statistical methods, system analysis, logical generalization, comparative analysis and expert evaluations. Results. The use of credit improvement tools by financial intermediaries in the world markets of financial services is proposed as a direction for the creation and improvement of modern banking services. Directions for the use of credit products in the global market of financial services have been developed. The effectiveness of the proposed measures is substantiated.

Financing low-carbon growth in Africa: Policy path for strengthening the links between financial intermediation, resource allocation and environmental sustainability

Financial intermediation drives resource allocation in the economy, which can influence the carbon emission intensity of economic output (CO2gdp). This study examines the impact of bank credit allocation on CO2gdp in African economies during the period 1995–2018. Two policy scenarios are empirically evaluated, taking into account the behaviour of financial intermediaries with limited financial resources for credit supply to the productive sectors. Policy Scenario I, a credit allocation system that places a greater emphasis on financing demands of government and state-owned enterprises (GSEs), has a positive (increasing) effect on CO2gdp. The alternative policy scenario, Policy Scenario II, which places a greater emphasis on financing demands of private sector entities (PSUs), has a negative (decreasing) effect on CO2gdp with stronger impact in the more carbon-intensive economies. In addition, renewable energy consumption makes greater contribution to reducing CO2gdp under Policy Scenario II. By implication, more credit supply to the PSUs strengthens the link between resource allocation and economic efficiency, resulting in the creation of greener economic output. Thus, the development of financial intermediation could play a role in helping African economies avoid carbon-intensive path to economic growth. • Credit allocation and carbon intensity of economic output in Africa examined. • Under Policy scenario I more credit are allocated to government-owned firms. • Under Policy scenario II more credit are allocated to the private sector. • Policy scenario II strengthens low-carbon growth. • The impact of renewable energy consumption increases under Policy Scenario II.

The Role of Non-Bank Financials in the Formation of Long-Term Resources for Economic Growth in Russia

The development of the activities of non-bank financial institutions that accumulate the resources of the national savings system on a long-term basis is seen as a factor in increasing investment in the Russian economy and its growth rates. When carrying out the study, we used general scientific methods, methods of structural, weigh, and dynamic analysis, and comparisons of performance indicators of non-bank financial institutions. Problems in the activities of organizations in the non-banking sector of the Russian financial market are predetermined by the parameters and trends in the development of the socio-economic situation in Russia, including insufficient efficiency of regulatory practices. The positive dynamics of the development of non-bank financial intermediaries is qualified as unstable; it is not supported by the solution of the structural and institutional problems of the Russian economy. In view of this, an increase in their role in the redistribution process is associated both with decisions of a more general order and with the improvement of the regulatory and supervisory practices implemented by the Bank of Russia. The solution to the identified problems in the development of the non-banking segment of the financial market should be aimed at turning it into an effective mechanism for capital formation to ensure economic growth.

Research on index construction of sustainable entrepreneurship and its impact on economic growth

Based on the triple bottom line of sustainable development, sustainable entrepreneurship has been well studied; however, the existing literature on the measurement of sustainable entrepreneurship is still limited. This paper attempts to quantify sustainable entrepreneurship through three indicators, innovative spirit, entrepreneurial spirit and decision-making spirit, and constructs a new time-varying index of sustainable entrepreneurship by the time-varying coefficient state space equation model. Applying the new time-varying index, this paper studies the impact of sustainable entrepreneurship on Chinese regional economic growth and explores the role of technical R&D and financial intermediary development in the path of influence. The empirical results show following conclusions. First, sustainable entrepreneurship promotes regional economic growth. Second, there exists a positive mediation effect of sustainable entrepreneurship influencing regional economic growth through technical R&D. Third, financial intermediaries have a positive effect on sustainable entrepreneurship, and they play a moderating role in the first half of the path through which sustainable entrepreneurship affects regional economic growth through technical R&D.

Nonbank Financial Intermediation in Times of Crisis: Identifying Leadership in the G20 Countries

Non-banking financial intermediation, which means the conduct of credit operations by financial institutions that do not have a license for this and was previously interpreted as “shadow banking”, has become a long-term trend in the development of the global financial market. The purpose of the study is to determine the changes in non-banking financial intermediation during periods of crises and the inter-crisis period, as well as to identify the leading countries in the development of non-banking financial intermediation in a long-term retrospective. A hypothesis is formulated that during periods of crises, not only does the volume of non-banking financial intermediation decrease (on a global scale and within national markets), but its structure also changes. To test the hypothesis, a cross-country comparative analysis of the level of development of non-banking financial intermediation based on the corresponding index was carried out, as well as clustering using the FOREL method to identify changes in the structure of global non-banking financial intermediation. As data sources, data from the Financial Stability Board Monitoring Dataset on Non-Bank Financial Intermediation and OECD. Stat data were used. The results of the study confirmed the correctness of the formulated hypothesis. On their basis, the directions for the development of non-banking financial intermediaries in the current conditions of the approaching recession of the world economy are determined: (1) maintaining the index of non-banking financial intermediation in the current range of values; (2) preservation of the polycluster structure of non-banking financial intermediation, since the decrease in the number of clusters occurs during periods of relative stability of the world economy; (3) increased heterogeneity of countries in terms of the level of non-banking financial intermediation. It is shown that the crisis caused by the pandemic had a stronger negative impact on non-banking financial intermediation than the global financial crisis. The theoretical significance of the results obtained is to identify the structure of global non-banking financial intermediation, as well as to propose a criterion for countries' leadership in terms of its level. The practical significance lies in the possibility of using the results obtained in the development of measures to ensure the stability of financial markets both at the global and national levels.

Формування напрямків підвищення інвестиційної привабливості підприємства на підставі методів економіко-математичного моделювання

The article is aimed at defining the general directions for increasing the investment attractiveness of a construction enterprise on the basis of the use of economic-mathematical methods that allow taking into account the real state of the enterprise along with the impact of the external environment, and forming the main trends for the short term. On the basis of factor analysis, the main factors of influence on the investment activity of the enterprise are determined. On the grounds of the defined factors, the main directions for increasing the level of investment attractiveness of the enterprise under study are formed. Applying the method of analysis of hierarchies, it is identified that the most appropriate from the point of view of experts is the direction of development of financial intermediation between the bank and its clients. At the same time, this method is the safest, because it does not pose a threat to the growth of the amount of borrowed funds, at the same time, the attractiveness as a potential object of investment increases due to more favorable conditions for the provision of funds from the bank. In addition, in cooperation with banks of the Kharkiv region, an increase in the investment attractiveness of the region is ensured. Investment activity of economic entities is constantly influenced by the changing factors of the external and internal environment, so its research, including by using the methods of economic-mathematical modeling, remains relevant and requires further research in this direction.

Spatial Disparity of Skill Premium in China: The Role of Financial Intermediation Development

Spatial Disparity of Skill Premium in China: The Role of Financial Intermediation Development

Tribalism and Finance

We assess the correlations between tribalism and financial development in 60 countries using data averages from 2000 to 2010. The tribalism index is used to measure tribalism whereas financial development is measured from perspectives of financial intermediary and stock market developments. The long-term finance variable is stock market capitalisation while short-run variable is private and domestic credit. We find that tribalism is negatively correlated with financial development and the magnitude of negativity is higher for financial intermediary development relative to stock market development. The findings are particularly relevant to African and Middle Eastern countries where the scourge of tribalism is most pronounced. JEL: E62, H11, H20, G20, O43

СОВРЕМЕННОЕ ЭКОНОМИЧЕСКОЕ СОСТОЯНИЕ МОНГОЛИИ

The paper presents the results of the economic state analysis of Mongolia. The necessity of restoring the macroeconomic stability of the country's economy (in the short term) and the transition to a more stable and diversified model of the economy (in the long term) is substantiated. The relevance and practical significance of the study in socio-economic situation analysis of Mongolia shows the restoration of macroeconomic stability of the country (in the short term), as well as the transition to a more stable and diversified economy (in the long term) will be greatly facilitated by more active participation in the processes of diversification in small and medium-sized enterprises. This, in turn, will require structural reforms, development of financial intermediation, increased investment in infrastructure, increased interregional integration to improve territorial connectivity and access to external markets.

"The current framework of financial education in Romania in the context of the informational economy"

"The research undertaken starts from the findings demonstrated by studies in the field, that the lack of basic financial knowledge of consumers is a vulnerability of the Romanian financial system and a strategic challenge for financial service providers. The aim of the study is to analyze the European and national framework in the field of financial education, public and private policies, programs and initiatives on improving financial knowledge at different occupational and age categories. The research hypotheses are based on demonstrating the need for a consistent European institutional framework, on identifying the interdependence between public policies to stimulate savings and an adequate level of financial education of the population. The results of the study confirm the need to implement measures and mechanisms complementary to existing ones, new rules and directions to follow in order to improve the level of mass financial education, the protection of consumer interests and the development of financial intermediation."

Finance, Institutions, and Private Investment in Africa

AbstractThis article extends the debate on finance versus institutions and measurement of property rights institutions (PRI). We assess the relationships between various components of PRI and private investment, notably: political, economic, and institutional governances. Comparative concurrent relationships of financial dynamics of depth, efficiency, activity, and size are also investigated. The findings provide support for the quality of institutions as a better positive correlate of private investment than financial intermediary development. The interaction of finance and governance is not significant in potentially promoting private investment, perhaps due to substantially documented surplus liquidity issues in African financial institutions. The empirical evidence is based on 53 African countries for the period 1996‐2010. Policy measures are discussed for reducing financial deposits, increasing financial activity, and hence, improving financial efficiency.Related ArticlesAideyan, Osaore. 2016. “Political and Institutional Prerequisites for Monetary Union: Assessing Progress in the Economic Community of West African States (ECOWAS).” Politics & Policy 44 (6): 1192‐1212. https://doi.org/10.1111/polp.12183Asongu, Simplice A., and Joseph Nnanna. 2019. “Foreign aid, Instability, and Governance in Africa.” Politics & Policy 47 (4): 807‐848. https://doi.org/10.1111/polp.12320Scarlato, Margherita, and Giorgio d'Agostino. 2019. “The Political Dimension of Cash Transfers in Latin America and Sub‐Saharan Africa: A Comparative Perspective.” Politics & Policy 47 (6): 1125‐1155. https://doi.org/10.1111/polp.12332

Policy of Sustainable Development State Regulation of Mongolian Industry

The paper presents the results of the analysis of state policy realization regarding sustainable development of industry in Mongolia. The study gives the reason for recovery of macroeconomics stability (in the short term) and transfer to a more stable and diversified economy model (in the longer term) as well as on the basis of the Russian experience necessity of using modern forms of regional industry organization. Consequently, it is explained the essentiality of structural changes, development of financial intermediation, investment in infrastructure and regional integration with the purpose of increase the level of regions interconnection and access to foreign markets. The purpose of the research is to define priority activities of the economic growth as well as measures focused on improvement of state management concerning sustainable industry development in Mongolia. To this effect there are used monographic and economic statistic research methods. It is concluded that relating to definite countries and regions taking into account the peculiarities it is advisable to explore the system of indexes, capable of measuring the results (and estimating efficiency) of sustainable development of economics industries. Thus, economic growth in Mongolia is possible only as a subject to partnership relations with the countries that have innovation technologies, know-how and attracting finance from foreign investors. Thereupon sustainable development of Mongolian industry, including mining industry depends on such factor as a possibility of application of the high technology in traditional economic activity, digital transformation of the industry, increase of human capital, environmental conditions. There are defined the conditions of realization of sustainable development strategy of Mongolian industry, for example forming territorial innovation industrial clusters and assuring effective cooperation between government, business and society at the regional level. There are proposed the measures regarding improvement of institutional environment of Mongolian industry. There are specified the tasks necessary to be solved for the purpose of setting the regions of industrial development and complex industrial planning.

Trust crisis in the financial sector and macroeconomic stability: a structural equation modelling approach

Although the growing body of literature that recognises a destabilising role of the trust crisis in the macroeconomic stability, the understanding of mediational pathways remains limited. The current paper fills the gap by contributing to the existing literature by examining closely the mediating effect of the trust crisis in the financial sector on the indicators of macroeconomic stability due to the anticipated impact of the financial intermediation development and the monetary policy transmission mechanism, as well as their combinatorial impact. A method of structural equation modelling was used to analyse the input data. It has been empirically confirmed that exacerbation of the trust crisis in the financial sector without the use of regulatory measures is detrimental to macroeconomic stability. The results of the mediation analysis show that transmission channels of the monetary policy mechanism and developed financial sector mitigate the harmful effects of deepening the trust crisis in the financial sector and lead to an increase in macroeconomic stability indicators. From a practical perspective, the findings revealed that interest, credit, and currency channels of the monetary policy transmission mechanism could be used to cope with the erosion of the trust crisis in the financial sector to macroeconomic stability.