Financial Sector Development Research Articles

A Study on Investors' Awareness Toward Preferences in Capital Market Investments

The research investigates money market investor preferences through investigation of investor awareness together with financial literacy and risk lenience on investment choices. The research evaluates investment choices based on educational fickles by examining The research investigates money market investor preferences through investigation of investor awareness together with financial literacy and risk lenience on investment choices. The research evaluates investment choices based on educational fickles by examining higher and lower-level investment options. The study gathers survey and interview data from primary sources and uses secondary data from published literature research. Perception of financial concepts enables understandingable investors to allocate funds into multiple investment vehicles including mutual funds together with equities because of their educational attainment. Individuals with basic financial understanding tend to pick defense-oriented investment choices that consist of fixed deposits alongside government securities. The study shows investors require precise financial education curriculums that provide them with needed financial understanding for better investment practices. According to the research findings investors require investment products that match their personal risk lenience preferences. The initiatives drive market enhancement by delivering educational programs which attract more investors to money markets. The research data directs policy creators as well as financial institutions and market supervision bodies to develop initiatives that enhance investor participation and financial inclusion. Numerous options derived from this study serve to construct investor trust by improving decision-making quality for an active inclusive money market that promotes financial sector development and stability.

The Impact of Financial Sector in Poverty Alleviation

This study aims to analyze the influence of financial sector development which is divided into four characteristics such as financial deepening, financial access, financial efficiency and financial stability and economic growth on poverty in the ASEAN region which has poverty problems. This study uses secondary data with panel data types with a research period of 2011 to 2023. This study uses the Panel Regression Analysis model. The results of this study indicate that financial deepening and efficiency have a significant negative effect on poverty, and economic instability has a significant positive effect on poverty. While the amount of financial access and economic growth do not have a significant effect on poverty.

The Role of IMF and International Financial Security: Ensuring External Sector Stability for Nigeria

This study examines The Role of IMF and International Financial Security: Ensuring External Sector Stability for Nigeria. It explores factors such as inflation, exchange rates, interest rates, and investment as critical determinants of external sector stability for Nigeria. Utilizing a quantitative research design, the study employs an econometric model to estimate the effects of these variables on external sector stability. The methodology involves data collection from reliable economic sources, followed by statistical analysis using Auto Regressive Distributed Lag Model (ARDL) to determine the significance and strength of relationships among the variables. The findings reveal that money supply is the primary long-run determinant of exchange rate movements in Nigeria, with excess liquidity leading to currency depreciation. In the short run, past inflation, trade openness, and entrepreneurial activities significantly influence exchange rate fluctuations. Trade openness contributes to exchange rate depreciation, suggesting that Nigeria’s import dependence exerts pressure on the foreign exchange market. Meanwhile, increased domestic enterprise activity strengthens the exchange rate, indicating the importance of production-driven economic policies. The presence of a stable long-run relationship, as confirmed by the error correction term, highlights the need for policy measures that balance short-term exchange rate volatility with long-term external sector stability. Based on these findings, the study recommends policy measures such as maintaining moderate inflation levels, stabilizing exchange rates through appropriate monetary policies, and fostering investment. Also, long-term structural reforms aimed at diversifying the economy, improving foreign exchange earnings through non-oil exports, and strengthening financial sector development will be crucial in sustaining external sector stability. By adopting these measures, Nigeria can enhance its economic resilience, mitigate external sector vulnerabilities, and promote sustainable exchange rate stability in the long run. Keywords: International Financial Security; External Sector Stability; Inflation, Exchange rate; Nigeria

Financial development and natural resources: Does information technology moderate for financial resource blessing?

Abstract The study investigates the nexus between natural resources rents (TNRR), Information and communication technology (ICTE), economic growth (EGT), institutional quality (IQ) and financial development (FD) in Malaysia, using quarterly data from 2001Q1 to 2020Q4. Motivated by the critical role of natural resources management, digital information, and institutional strength in promoting financial sector development in Malaysian economy, this study seeks to expose the interplay between these variables. Fourier unit root tests were utilized to determine the order to integration among the variables, revealing a unique order of integration. The RALS-FARDL cointegration approach confirmed the presence of long-run nexus, which was further validated by the Bayer-Hanck combined cointegration test. To estimate the long-run elasticity, DOLS methodology was employed, identifying a resource curse for the financial sector in Malaysia. The results demonstrate that ICTE positively affects FD. Moreover, higher IQ enhances and strengthens the financial sector. Further, the positive influence of the combined effect of ICTE and natural resources further confirms that ICTE positively moderates the association between TNRR and FD. Causality analysis confirmed bidirectional causal interaction between FD and economic growth, supporting the feed-back hypothesis. The study highlights several crucial policy implications. The Malaysian government should prioritize diversifying investment beyond natural resources and reinforce the use of ICTE for conserving natural resources in such a way to leverage the financial sector. By fostering an institutional framework and investing in ICTE, Malaysia can achieve sustainable economic growth in the long-run.

Macroeconomic Enablers of Sustainable Development in G20 Countries: The Role of Tourism

The G20 countries present a congenial macroeconomic environment in terms of per capita GDP, gross fixed capital formation, labour-force participation, inflation, cross-border trade, financial sector development, and human development for the growth of travel and tourism. These countries have a strong potential for the development of travel and tourism in terms of international tourist arrivals, international tourism expenditure and international tourism receipts. As appropriately recognised by the members of G20 in 2012 for the first time, and as identified during the India’s Presidency in 2023, the potential of travel and tourism can optimally be utilized to make progress towards the SDGs by 2030. In this direction, this study is an attempt to empirically examine the impact of tourism development on sustainable development in G20 countries. The novelty of this study lies in estimating short-run and long-run effects of selected covariates on sustainable development in G20 nations in a panel framework. The results of the estimation of PMG based ARDL regression indicate a statistically significant positive contribution of the development of travel and tourism on sustainable development when macroeconomic indicators are the enablers. This finding contradicts the findings of a recent study by Destek & Aydin that tourism can be detrimental to sustainable development. Thus, the present study ushers a new direction for tourism-led sustainable development. The policy implication is that the effective and efficient implementation appropriate tourism development strategies in such a favourable macroeconomic environment can add to the progress of SDGs in G20 countries.

INDUSTRIAL GROWTH VOLATILITY IN CAMEROON: DOES FINANCIAL SECTOR DEVELOPMENT MATTER?

The objective of this paper was to investigate whether changes in financial sector development affect industrial growth volatility in Cameroon. After exploring the related literature on the issue, time series data for 41 years was used spanning from 1979 to 2020 and ARDL bound test estimation technique employed. Findings showed that changes in financial sector development do not significantly affect volatility in industrial growth in the country. Also, financial sector development as a moderating factor renders changes in inflation volatility insignificant in controlling industrial growth volatility in the economy. The authors recommend that stakeholders should implement policies to bridge the gap separating the financial sector and the industrial sector of the country so that they should be interdependent. The financial sector as well should be empowered to meet the demands of the industrial sector for the industrial sector to principally rely on it for finance.

Financial sector development and industrial sector performance in West African Monetary Zone (WAMZ) countries: A threshold effect of human capital

Financial sector development and industrial sector performance in West African Monetary Zone (WAMZ) countries: A threshold effect of human capital

Multidimensional analysis of finance-growth nexus in Africa: evidence from a panel ARDL model

Abstract We investigate the relationship between financial development and economic growth across 30 African countries from 2000–2020 using a panel ARDL model. We focus on four dimensions of financial development – financial deepening, efficiency, liquidity, and stability. While financial efficiency and deepening measures lead to positive economic growth, liquidity and stability measures of financial development significantly hinder growth. The effect of the financial sector development on economic growth is income dependent such that the effect is more evident in upper middle-income countries. Our findings suggest that a one-size-fits-all approach is insufficient, and policymakers should analyze different dimensions of financial development and incorporate regional and income contexts.

The Effect of Economic Freedom, Indicators of Financial Sector Development, Income and Education on Renewable Energy Use: An Empirical Analysis of Post-Transition EU Member States

Fossil fuels are among the most crucial factors underlying global environment impairment through CO2 emissions. In addition to this, the globalized world has witnessed significant price volatility, instability and disruptions in the supply of fossil fuels. Therefore, renewable energy transition (RET) has become a mandatory option for countries to tackle these environmental, economic, and energy insecurity problems in energy markets dominated by fossil fuels. But the RET process has remarkably slowed down in recent years due to increasing economic volatility, financial obstacles, geopolitical risks, and bottlenecks in the development of low-carbon technologies. In this regard, this study investigates the effect of market structure proxied by economic freedom and indicators of financial development, together with real GDP per capita and education, on the utilization of renewable energy in post-transition EU member states across the 2000–2021 duration by utilizing causality and cointegration tests. The outcomes of the causality analysis reveal a feedback relationship among renewable energy use, economic freedom, indicators of financial development, and real GDP per capita but a unilateral causality between education and renewable energy use. On the other hand, the outcomes of AMG estimation reveal a positive effect of economic freedom, real GDP per capita, and education on the utilization of renewable energy in some countries but a negative effect of financial institutions’ development on renewable energy use and mixed results on the effect of financial markets’ development regarding renewable energy use. Our results indicate that education is a significant instrument to make progress in renewable energy use via multiple channels, but governments should incentivize the financial system to support the RET process by favorable lending and sustainable finance instruments like green bonds or sustainability-linked loans.

Effect of Cashless Policy on Financial Sector Development in Nigeria

Purpose: The purpose of this study is to examine the effect of cashless policy on financial sector development in Nigeria specifically it sought to examine the effect of mobile banking automated teller machine and point on sale on financial sector development in Nigeria. Methodology: The study adopted VAR methodology coupled with the the Philips-Perron test (PPT) to test the stationarity of the variables and ordinary least square (OLS) estimation technique to confirm the robustness of the model, error correction model (ECM) to determine the speed of adjustment, using annual time series data (secondary data) covering the period 2012-2022. Findings: The findings revealed that there is positive relationship between ATM and financial sector development is as a result of e-transaction through technology acceptance and diffusion of innovation of cashless policy in Nigeria. The result also revealed that point of sale (POS) and mobile banking (MB) had an inverse and significant effect on financial sector development in Nigeria. This insignificant effect can be attributed to poor internet and power supply, inadequate supply of point-of-sale devices and unfriendly deposits money banks mobile applications of some banks in Nigeria. Mobile banking services, despite having an inverse relationship with financial sector development, reduce commercial bank queues due to their ease of use. Unique Contribution to Theory, Practice and Policy: The study recommends that to promote cashless economy, massive sensitization campaigns and reliable power supply are necessary. Furthermore, the regulatory bodies must address issues such as faulty ATM machines, robbery, limited access and excessive charges.

Does age composition influence financial sector development in Sub-Saharan Africa region? The role of economic globalization

PurposeConsidering the panel data from 1984 to 2020, this study examines the impact of demographic structure (young age, working age and old age manpower) on financial development in 44 Sub-Saharan Africa (SSA) countries. Following the World Bank’s classification, the SSA region is sub-sampled into 21 low-income, 18 lower-middle-income and five upper-middle-income countries to separately study these groups, along with studying for the whole region in a panel.Design/methodology/approachDrawing from the literature, it incorporates economic growth, economic globalization and inflation as a set of control variables in the financial sector development function. This study employed PCSEs and FGLS regression methods along with applying the FMOLS test for results robustness.FindingsThe result of PCSEs and FGLS evidences an adverse impact of the young and old age population on financial development for the entire SSA region, low-income and lower- and middle-income countries, but the same is found to be positively related to financial development in the upper- and middle-income countries. We observed varying effects of economic growth, economic globalization and inflation for different groups within the SSA region.Originality/valueFrom the policy perspective, it suggests that policymakers of the groups of low-income and lower-middle-income countries need to scrutinize the adverse effects of the young and old-age populations on financial sector development and should also be taken seriously in the formulation of their long-term financial development policies.

The Impact of Remittances on Economic Growth in a Remittance Receiving Country

The study is to examine the impact of remittances on economic growth, in particular how the development of domestic financial sector influences a country’s capacity to take advantage of remittances. Bangladesh’s remittances, specifically inflows, are an important source of income support and economic growth. Employing ARDL model on a dataset of 46 years from 1976 to 2021, this study finds that remittances boost growth in Bangladesh with developed financial systems. The study also finds that capital formation is positively associated with economic growth in the long run while remittance is negatively influencing economic growth. Thus, policies should focus on developing the financial system, reducing the cost of remitting and encouraging migrants to send remittances using formal channels.

The Omnibus Method: Challenges in the Legislative Process

The Omnibus Law in the Job Creation Law marks the beginning of the use of the omnibus method in Indonesia’s legislative process, aimed at reducing the country’s excessive regulatory framework. The law was reviewed by the Constitutional Court, which declared it conditionally unconstitutional, requiring amendments within two years. Failure to comply would result in the law becoming permanently unconstitutional, with repealed provisions reinstated. In response, Undang-Undang Pembentukan Peraturan Perundang-undangan was amended to include the omnibus method in legislative formulation. As a result, other laws, such as the Health Act and the Financial Sector Development and Strengthening Act, have also adopted this approach. However, a key challenge is the need for laws created through the omnibus method to be revised using the Omnibus re-method, highlighting the difficulties in applying the omnibus method in response to evolving legal and societal needs.

Training & Development, Organizational Commitment and Turnover Intentions in Financial Sector Moderating Role of Constituent Attachment

This paper examines how training and development leads to an impact on employees' intention to leave in the financial sector, with commitment to the organization as a mediating variable and constituent attachment as a moderating variable whereas training availability, learning motivation, and manager’s support for training play roles as independent variables. A quantitative strategy was employed, using a survey form to get information from a random stratified sample of financial sector employees. Smart PLS was employed to analyse data., and SPSS for demographic analysis. Three hundred surveys were sent out, and seventy percent of them were returned.(n = 210) out of which only 204 responses were valid. The findings indicate that training and development and motivation to learn don’t have any influence on turnover intentions, with organizational commitment mediating this relationship. Constituent attachment doesn’t moderates The relationship between organisational commitment and intention to leave whereas only managerial support for training significantly influence turnover intention. The findings suggest that financial sector organizations can reduce turnover intentions by investing in training and development, fostering commitment to the organization, and promoting constituent attachment.

Digital transformation as a driver of financial sector development

Digital transformation has become one of the main driving forces behind the development of the financial sector, fundamentally changing its structure and functioning. Modern innovative technologies, such as artificial intelligence, cloud services, the Internet of Things, big data analytics, and blockchain, provide opportunities to introduce new approaches to managing financial processes, helping to increase efficiency, reduce costs, and improve customer service. Digital platforms allow banks and financial institutions to automate routine processes, increasing productivity and reducing transaction processing time. The COVID-19 pandemic has become a positive catalyst for an accelerated transition to digital financial solutions. The closure of physical bank branches and the restriction of social contacts have forced consumers and institutions to rethink their approaches to financial services. As a result, mobile applications, online banking and electronic payment systems have become an integral part of everyday life. Financial institutions have quickly adapted to the new environment by offering customers convenient and secure ways to interact, which has contributed to the growth of trust in digital service channels. However, along with the benefits of digitalization, the financial sector faces a number of challenges. In particular, cybersecurity issues are becoming increasingly relevant as the amount of data stored and processed in digital format grows. Protecting confidential information and ensuring the security of financial transactions requires institutions to invest heavily in modern security systems and ongoing staff training. In addition, the rapid development of technology is outpacing the regulatory framework, which may lead to legal uncertainties and increased risks for market participants. Financial institutions implementing digital solutions face the need to restructure their business models to remain competitive. This requires investing in the latest technologies, developing partnerships with Fintech companies, and shifting to new approaches to customer interaction. Innovative financial products, such as automated investment platforms, digital currencies, and mobile payments, are becoming the basis for the future development of the sector, providing convenience, accessibility, and an individualized approach to customer service. At the same time, digital transformation is creating new opportunities for economic growth, increasing the competitiveness of financial institutions and facilitating integration into the global economy. Research in this area allows us to better understand the impact of digital technologies on economic processes and develop strategies to maximize their potential. Prospects for further development of the digital financial sector include improving data analytics processes, enhancing customer service, and strengthening regulatory frameworks to ensure the safety and soundness of financial systems. The article discusses the main trends of digital transformation, its impact on the financial sector and strategic approaches to overcoming the challenges faced by market participants in the digital era.

Are natural resources a blessing or a curse for digital infrastructure development? The role of financial sector development

Are natural resources a blessing or a curse for digital infrastructure development? The role of financial sector development

Globalisation and Insurance Sector Penetration: Macro Evidence from Nigeria

The impact of globalisation on the penetration of the insurance industry in Nigeria from 1987 to 2021 was investigated in this study using the distributed lag long-run estimating technique. The results from the use of KOF Globalisation index showed that globalisation promotes penetration of the insurance sector (Coeff =0.1388; p. value0.01). It furthered revealed that Insurance penetration rate rises with increased GDP per capita, population, and financial sector development. However, inflation reduces insurance penetration rate. Globalisation greatly aids in the penetration of the insurance sector in Nigeria which suggests the opening up of the Nigerian insurance market to foreign competition, lowering costs and increasing the efficiency of insurance services. The government also need to formulate appropriate policies to encourage the mobility of insurance products, services, and capital. Asides the aforementioned, insurers in Nigeria are encouraged to continuously offer globalised products that adhere to international standards to attract foreign consumers. Meanwhile, the dark sides of globalisation should be mitigated while introducing these new insurance services and products.

Do technological innovation and financial development determine environmental quality? Empirical evidence from Arab countries

PurposeThe Arab countries have numerous environmental problems, including massive emissions of carbon dioxide, climate change and increasingly high temperatures. Many prior studies have explored the various determinants of environmental quality. However, few papers offer adequate empirical evidence on the role of technological innovation and financial development in determining environmental quality. To fill this gap, this study aims to investigate the impact of technological innovation and financial development on CO2 emissions, controlling for several factors.Design/methodology/approachThe study sample data cover 10 Arab countries over a 30-year period. Because of the existence of non-stationarity and cointegration, the authors use dynamic ordinary least squares and fully modified ordinary least squares models to perform regressions among the variables.FindingsThe statistical results reveal that technological innovation and financial development both negatively determine CO2, which implies that both factors ensure environmental quality in this region. A developed financial sector facilitates access to funds for technological innovation and thus enables the adoption of cleaner production technologies and renewable energy sources. Both factors reduce environmental degradation. In addition, advanced financial systems incentivize investment in ecofriendly projects and promote sustainable practices, fostering a conducive environment for improving environmental quality. The empirical analysis then reveals the pollution halo effect of foreign direct investment inflow.Research limitations/implicationsBased on the empirical findings, the authors recommend increasing investment in research and development activities and pay more attention to improvement of the financial sector. Both factors can enhance environmental sustainability in Arab countries.Originality/valueThis study provides robustness for prior analyses and adds to the literature by widening the coverage to include Arab countries.

Does Climate Policy Uncertainty Abate Financial Inclusion? An Empirical Analysis Through the Lens of Institutional Quality and Governance

Environmental sustainability concerns have led to an increased focus on climate finance, resulting in substantial investments to boost financial sector development. However, recently, climate initiatives have encountered multiple policy uncertainties. This study aims to empirically investigate the impact of U.S. climate policy uncertainty (CPU) on Indian financial inclusion, in addition to exploring the moderating role of institutional quality on the aforementioned relationship. To achieve the above objectives, we first constructed two separate indexes for financial inclusion using the weighted method and principal component analysis. Next, to empirically estimate the above relationship, we employed the two-step system-generalized method of moments (Sys-GMM) and the sequential (two-stage) linear panel data model (SELPDM) on the sample data from 2000–2022. The Sys-GMM estimate test validated that climate policy uncertainty negatively influences India’s financial inclusion. However, institutional regulation and governance assist in moderating the negative influence of U.S. climate policy uncertainty on Indian financial inclusion initiatives. Furthermore, the study also confirmed that various dimensions of institutional regulation and governance exert a positive and significant effect on financial inclusion. Finally, the study validates that economic growth and technological advancement assist financial inclusion initiatives in India. The study is an original work and offers several policy recommendations.

Политическая экономия финансового развития

The development of financial sectors in many countries has been recognized as a key factor in their economic growth over recent decades. However, this has not been enough to motivate authorities to advance financial development, which remains uneven across countries. While the advantages of better financial development are clear, understanding the factors behind success remains a challenge. This paper focuses on this issue, aiming to examine financial development through the lens of political economy and summarize findings from related studies within this framework. It shows that research on the “finance-growth nexus” can be interpreted politically, revealing, for example, the non-linearity of the relationship and the varying sensitivity of economic growth to financial depth indicators across countries. The analysis also highlights how special interest groups hinder the development of certain financial market sectors, particularly financial inclusion. In Russia, this situation is evident in the collective investment market, where financial services remain insufficiently accessible, and market depth lags behind other BRICS countries. The study suggests that financial access can be improved through technological development and deeper international integration, though challenges remain, including digital inequality and the construction of opaque financial contracts. Additionally, countries with different levels of financial development may not equally benefit from globalization, posing further constraints. These issues offer promising avenues for future research.