Finance For Economic Growth Research Articles

An Analysis of Impact of Climate Finance on MSMEs and Entrepreneurial Growth

Improved development and better financing for economic growth may be achieved through sustainable Finance (SF).The natural system must be protected and restored to achieve sustainable development. SIDBI, NITI Aayog, and the WorldBank work together to make SF available to businesses of all sizes, from Microenterprises to Multinational conglomerates.Financial instruments such as climate funds, green bonds, impact financing, social bonds, microfinance, the SIDBI SF Schemefor funding, NABARD, and Make in India are the most important sources of sustainable financing for Small and Mediumsizedbusinesses enterprises (MSME). As part of its commitment to achieving net-zero emissions by the year 2070, Indiahas several MSMEs and SMEs involved in the Projects of solar power plants; renewable energy; green machinery; wastemanagement; electric vehicles (EV); clean energy; recycling; poverty alleviation; and energy conservation. As a way tohelp the green economy flourish and to satisfy the sustainable development goals (SDGs) and ESG (Economic, Social, andEnvironmental) fundraising requirements, the RBI has determined that eco-friendly and environmentally friendly initiativesshould be prioritized for priority sector lending (PSL). This article analyzes financial mechanics for green production andsustainable development using theoretical notions. Increasing the ESG to support long-term economic growth and thesustainability of small and medium-sized enterprises (SMEs) and large corporations (Government of India) through climatechange missions is essential.

The Impact of the Sanctions Policy of Unfriendly Countries on the Russian Financial System

In the context of unprecedented sanctions pressure, the author examined the current situation in Russian financial system analyzing the reasons for the current trends in the growth of public finances against the backdrop of a low growth in gross domestic product. The study identified main directions taken at the state level and discussed their consequences. The measures are the following: introduction of a financial policy to combat the «Dutch disease»; maximum openness of the Russian financial system for international finance; active policy of borrowing in international financial markets; improvement of tax administration and concentration of financial resources of budget organizations in the treasury system; development of a system to stimulate the demand of individuals, which forms «long money» in the economy and the consumer behavior of the population; formation of a financial center in Moscow; and imbalance of regional budgets. The aim of the study was to examine the financing of the regional economy in the context of EU and Anglo-Saxon sanctions. The author highlighted two unresolved problems: underestimation of the role of finance in economic growth and development of the regions and the problem of direct link of finance and reproduction. The paper analyzed the impact of sanctions against Russia on the functioning of the country's financial system as a whole and on the factors of production. The study revealed that a significant adjustment of the scientific paradigm of financing at the state and sub-federal levels is necessary to ensure economic growth and development of Russia.

Impact of Sustainable Finance on MSMEs and other Companies to Promote Green Growth and Sustainable Development

Purpose: Sustainable Finance (SF) contributes to better development and better Finance for Economic growth. Sustainable development is protecting and restoring the ecological system. SIDBI, NITI Aayog, and World Bank facilitate Sustainable Finance to encourage businesses to grow from Small Medium Enterprises to large Industries to make an enormous global impact. As per the World Bank estimate, adversely affect the standard of living of the population and climate change will reduce India’s GDP by nearly 3%. For tracking the climate protection performance of the country, the CCPI tool is used. The Key sustainable finance providers to companies and MSME’s are Banks, Corporations, International Financial Institutions, Institutional Investors, International organizations through Financial Instruments Climate Funds, Green Bonds, Impact Finance, Social bonds, Microfinance, SIDBI Sustainable Finance Scheme for funding, NABARD, and Make in India. MSMEs, and SMEs involved in the Projects Solar Power Plants, renewable energy, Green Machinery, Waste Management, Electric Vehicles (EV), Clean Energy, Recycle, Poverty alleviations, and Energy conservation, and India is committed to achieving Net Zero Emissions by 2070. During the Climate summit in Glasgow, India accepted for Five –Point climate ‘panchamrit, or pledge’ towards climate change and Climate Finance. As per the Environment ministry. India needs $280 billion for green infrastructure and the government of India proposed the creation of a Social Stock Exchange, Europe Investment Bank (EIB) with SBI. RBI has considered Green and Sustainable projects should be put under Priority Sector Lending (PSL) to support GE (Green Economy) growth and to meet the SDG (Sustainable Development Goals) and ESG (Economic, Social, Environment) guidelines for fundraising. Methodology / Design /Approaches: In this article theoretical concepts are used in the analysis of various financing Mechanics for green production and Sustainable development. Findings and results: The effectiveness of sustainable finance or Climate finance required for MSME and Companies for greener production infrastructure and government of India missions on climate Change, Regular to boost the ESG to promote sustainable development and Economic growth. Originality/value: Analysed the various articles and case studies and prepared the model required for sustainable fiancé for green growth in India. Type of Paper: Research Analysis

Institutional Structure of the Russian Financial Market: The Need for Regulatory Transformation

The article analyzes the current state of the Russian financial market’s institutional structure. The main variants of activity combinations of its participants allowed by the law are described. Based on a comparison of the advantages and risks arising from the combination of different areas of work by market participants, proposals are formed to adjust the regulatory requirements for permissible combinations of activities. The purpose of the changes put forward is to increase the efficiency of financial resource redistribution, which, in turn, will provide financing for economic growth of the Russian Federation. It is proposed to consolidate the division of activities of financial market participants into two categories. The first one is systemically important; such organizations should be controlled by the state directly or through a chain of owners. The other one is the rest of the organizations, for which the opportunities for simultaneous work in a large number of areas can be expanded under such conditions. When fully state-controlled companies perform the functions of an exchange, a central depository, a clearing organization and a central counterparty, it seems that the rest of the market participants, without creating significant risks for the market, will be able to combine work in the securities market using their own and clients’ funds, operation as a credit and deposit intermediary or an investment and financial platform, and work in the foreign exchange market and the digital asset market. Improving the efficiency of the financial market may be instrumental in providing the projects and production with the financial resources.

Инвестиции домохозяйств в банковские депозиты: анализ современной ситуации

In conditions of macroeconomic instability and lack of financial resources for economic entities and the state, an important source of financing for economic growth is the resources attracted from the population in Bank deposits. However, the savings model of behavior of Russians in modern conditions noticeably transformed under the influence of a decrease in the purchasing power of wages and a decrease in living standards in the majority of the country's regions. The tariff policy implemented in credit institutions also reduces the attractiveness of Bank deposits. The article analyzes the current trends of citizens investing their funds in Bank deposits.

Determination of influential financial factors on non-performing loans: evidence from Turkey

Turkish banking sector (TBS) has been faced with a growth of the rate of non-performing loans (NPL) over recent years. The level of NPL plays a restricting role of credit providing capacity of banks. So, necessary financing for economic growth cannot be provided and hence a variety of uncertainties and deteriorations in macro economy have been seen in Turkey. In this context, determination of factors affecting of NPL increasing is required to keep under control. Therefore, this study presents the critical factors on NPL by using 14 variables, quarterly data for the period of 2003Q1-2019Q2, and the multivariate adaptive regression splines (MARS) method. The results provide the evidence that the commercial credit interest rates, provisions, risk-weighted assets (RWA), credits, legal equity, net profits, and EUR/TL are the most influential factors on NPL, respectively.

STATE SUPPORT FOR «GREEN» INVESTMENTS AND MARKET «GREEN» FINANCING: FOREIGN EXPERIENCE

The present study reveals the trends and features of the current state of financing the foreign countries’ transition to a new «green» economic growth model. To summarize the contemporary experience of countries’ integration into public administration practice the approaches and standards in the field of «green» investments financing.The subject of the study is the set of measures implemented by countries to develop sources of finance for «green» economy projects.Tasks: 1) to consider the principal directions of the «green» investments state policy support, its purpose, and the tools used; 2) to identify the market’s role in the «green» economy financing; 3) to clarify the main issues constraining private investments in «green» projects. The countries’ approach to «green» economic growth financing is examined in the present paper by means of common methods of scientific knowledge.There reviewed the arguments justifying the government support for «green» investments. There revealed the problems constraining the market «green» financing development and speculations about their origins. The study concludes that the countries’ economic policies are aimed at improving the existing model’s efficiency, not at the transition to the new «green» economy model. Thus, through the state support tools, there being generated strong signals signifying the creation of favorable market conditions for the functioning of a new economy sector – the sector of «green» technologies.

Розвиток банківського кредитування як механізму фінансування економічного зростання

Розвиток банківського кредитування як механізму фінансування економічного зростання

Interactive effects of human capital in finance–economic growth nexus in Sub-Saharan Africa

PurposeThe purpose of this paper is to examine the interactive effect of human capital in financial development–economic growth nexus. Relative to the quantity-based measure of enrolment rates, the main aim was to determine how quality of human capital proxied by pupil–teacher ratio influences the relationship between domestic financial sector development and overall economic growth.Design/methodology/approachData are obtained from the World Development Indicators of the World Bank for 29 sub-Saharan African (SSA) countries over the period 1980–2014. The analyses were conducted using the system generalised method of moments within the endogenous growth framework while controlling for country-specific and time effects. The author also follows Papke and Wooldridge procedure in examining the long-run estimates of the variables of interest.FindingsThe key finding is that, while both human capital and financial development unconditionally promotes growth in both the short and long run, results from the interactive terms suggest that, irrespective of the measure of finance, financial sector development largely spurs growth on the back of quality human capital. This finding is also confirmed by the marginal and net effects where the interactive effect of pupil–teacher ratio and indicators of finance are consistently huge relative to the enrolment. Statistically, the results are robust to model specification.Practical implicationsWhile it is laudable for SSA countries to increase access to education, it is equally more crucial to increase the supply of teachers at the same time improving on the limited teaching and learning materials. Indeed, there are efforts to develop rather low levels of the financial sector owing to its unconditional growth effects. Beyond the direct benefit of finance, however, higher growth effect of finance is conditioned on the quality level of human capital. The outcome of this study should therefore reignite the recognition of the complementarity role of human capital and finance in economic growth process.Originality/valueThe study makes significant contributions to existing finance–growth literature in so many ways: first, the auhor extend the literature by empirically examining how different measures of human capital shape the finance–economic growth nexus. Through this the author is able to bring a different perspective in the literature highlighting the role of countries’ human capital stock in mediating the impact of financial deepening on economic growth. Second, the author makes a more systematic attempt to evaluate the relative importance of finance and human capital in growth process while controlling for several ancillary variables.

Finance in Economic Growth: Eating the Family Cow

The American economy changed rapidly in the last half-century. The National Income and Product Accounts (NIPA) were designed before these changes started. They have stretched to accommodate new and growing service activities, but they are still organized for an industrial economy. It is hard to fit finance into the measurement of national product and of economic growth, and similar problems bedevil efforts to include other intangible investments as well. I describe how our current accounts deal with these problems, and I argue that existing NIPA data fail to describe the future path of growth in our new economy because they lack output data on financial, human and social capital investments. They fail to show that the United States is consuming its capital stock now and will suffer later, rather like killing the family cow to have a steak dinner.

Banks and economic growth in developing countries: What about Islamic banks?

Islamic banks (IBs) have a significant role in the growth of gross domestic product of the developing countries. The Islamic participatory schemes integrate the assets of lenders and borrowers. They allow enable IBs to lend on a longer term basis to create projects with higher risk-return profiles and, thus, to support economic growth. Our investigation examines the contribution of Islamic finance in economic growth. Using a panel data-set, we compare between IBs and conventional banks in their adding to economic growth. We studied a sample of 120 banks between 2005 and 2012. By means of three ordinary least-square regressions, our empirical investigation reveals that the development of non-usurious banks supports economic growth. Moreover, the cooperation between the two financing modes improves economic growth. The integration of this new funding never neglected the role of the conventional method of financing. The practice of IBs is also away from their theoretical mode in terms of participation results.

Growth with Green Finance:A Required Foundation for Sustainability

Sustainable development is inclusive development since the poor and the disadvantaged have to bear the scathing burden of unsustainable development. Sustainable, resilient pathways to economic growth are important aspects for developing countries. This paper explores the vital issues concerning green finance and how finance can take account of what is to be sustained and what is to be developed. This paper looks at green finance through green finance pathways, green finance initiatives and green finance in India to make that crucial shift towards an environment-sensitive finance for economic growth. The paper concludes with suggestions and recommendations for progressing towards environmental sustainability through increasing green investment since there is a vast shortfall in required investment and sustainability targets of nations.

Finance For Growth and Policy Options for Emerging and Developing Economies: The Case of Nigeria

Finance is generally regarded as important for economic growth, but the role of finance in economic growth is a controversial issue in the economic literature. The concept of “finance for growth” refocuses the relationship between finance and economic growth by redirecting the role of government policies in finance, and recognizes how finance without frontiers is changing what government policies can do and achieve. The focus of this paper is not to join the debate, nor to analyse the impact of financial development on economic growth, but to discuss the concept of “finance for growth” within the context of emerging and developing economies. The increasing development needs of Emerging Market Economies (EMEs) to raise per capita income, reduce unemployment rate, construct and maintain basic infrastructure, and invest more in human capital, make the role of finance for growth in these economies indispensable. The paper reviews the financial policies in selected EMEs including: China, South Africa and Nigeria and attempts to situate the Nigerian economy among the EMEs within the context of Finance for Growth. The paper notes that financial policies designed in various EMEs had the similar goal of making the financial system to provide key financial functions. However, large differences exist in the efficiency of the financial system in each country. The paper found that what matters to economic growth is access to financial services or financial inclusion and not which sector supplies the funds. The paper suggests appropriate policy options to build confidence in the Nigerian financial system.

Financial deepening and economic growth

The core of Shapley–Shubik games and general equilibrium models with a Venn diagram is applied for a theory on the role of real finance in economic growth among advanced economies. Then the dynamic computable general equilibrium (DCGE) models for Germany, France, the UK, Japan and the USA are constructed to assess the validity of the over-financing hypothesis that has reappeared after the financial crisis of 2008. Actual financial deepening ratios observed in the nonconsolidated balance sheet of the OECD exceeded by factors of 3.5, 2.4, 5.1, 11.6 and 4.8 than the optimal financial deepening ratios implied by DCGE models, respectively, in these countries because of excessive leveraging and bubbles up to 19 times of GDP which were responsible for this great recession. Containing such massive fluctuations for macroeconomic stability and growth in these economies are not possible in conventional fiscal and monetary policy models and require a DCGE analysis like this along with adoption of separating equilibrium strategy in line of Miller–Stiglitz–Roth mechanisms to avoid problem of asymmetric information in the process of financial intermediation so that the gaps between actual and optimal ratios of financial deepening remain as small as possible.

Does access to external finance improve productivity? Evidence from a natural experiment

We study the relation between access to finance and productivity. Our contribution to the literature is a clean identification of a causal effect of access to finance on productivity. Specifically, we exploit an exogenous shift in demand for a product to expose how producers adapt their productivity in the presence of varying levels of access to finance. We use a triple differences testing approach and find that production increases the most over the sample period in areas with relatively strong access to finance, even in comparison with a control group. This result is statistically significant and robust to a variety of controls, alternative variables, and tests. The causal effect of access to finance on productivity that we find speaks to the larger role of finance in economic growth.

Does Access to External Finance Improve Productivity? Evidence from a Natural Experiment

We study the relation between access to finance and productivity. Our contribution to the literature is a clean identification of a causal effect of access to finance on productivity. Specifically, we exploit an exogenous shift in demand for a product to expose how producers adapt their productivity in the presence of varying levels of access to finance. We use a triple differences testing approach and find that production increases the most over the sample period in areas with relatively strong access to finance, even in comparison to a control group. This result is statistically significant, and robust to a variety of controls, alternative variables, and tests. The causal effect of access to finance on productivity that we find speaks to the larger role of finance in economic growth.

Access to finance, economic growth, and sustainable development in South Africa

Access to finance plays a significant role in economic development. The cost, efficiency of delivery, financing period, and terms under which finance is obtained influence the likelihood that development will be sustainable. Sustainable development requires that finance be supplied to the points of demand where economic growth can take place in a way that is sustainable and self-sustaining. This is more complex than merely providing finance for economic growth. In this paper, we use South Africa as a case study to discuss the relationship between access to finance, economic growth, and sustainable development. We provide a broad description of the financial system in South Africa, with particular emphasis on the role of banks and informal finance in the provision of credit to individuals and the SMME (small, medium, and micro enterprise) sector. We use a series of correlation tests and develop a basic econometric model to test the relationship between economic growth and the use of financial services in South Africa. In the correlation analysis, we focus on specific types of financial services sector output, with particular emphasis on consumer and household use of financial services. Results indicate that there is a positive relationship between growth in the use of a range of financial products and the rate of growth of the GDP (gross domestic product) of South Africa. In addition, we find that there are a number of direct, indirect, and interactive relationships, which determine the rate of usage of financial services in relation to the GDP. We also find that access to finance in South Africa is skewered by race and gender and also towards the urban areas. Such policy is deleterious to sustainable development. Accordingly, we conclude by suggesting policy that may enhance economic growth and sustainable development in South Africa.

More on Finance and Growth: More Finance, More Growth?

JULY/AUGUST 2003 31 Nobel Prize winners disagree about the impact of the financial sector on economic growth. Some do not even consider finance worth discussing. A collection of essays by the “pioneers of development economics”—including three winners of the Nobel Prize in Economics—does not discuss finance (Meier and Seers, 1984). At the other extreme, Nobel Prize winner Merton Miller (1998, p. 14) recently remarked “that financial markets contribute to economic growth is a proposition almost too obvious for serious discussion.” As a third view, Nobel Laureate Robert Lucas (1988) holds that the role of finance in economic growth has been “over-stressed” by the growth literature. Resolving the debate about the importance of financial development for economic growth is important for distinguishing among theoretical models. More importantly, information on the importance of finance for growth will affect the intensity with which researchers and policymakers attempt to identify and construct appropriate financial sector reforms around the world. This paper selectively discusses recent empirical work on the controversial issue of whether financial systems play a critical role in determining long-run rates of economic growth. Building on work by Bagehot (1873), Schumpeter (1912), Gurley and Shaw (1955), Goldsmith (1969), and McKinnon (1973), recent research has employed different econometric methodologies and data sets to assess the role of the financial sector in stimulating economic growth. I will focus on three classes of empirical studies: (i) pure cross-country growth regressions, (ii) panel techniques that exploit both the cross-country and time-series dimensions of the data, and (iii) microeconomic-based studies that examine the mechanisms through which finance may influence economic growth. Thus, I will largely ignore country case studies and purely time-series investigations, which generally confirm the conclusions from the cross-country, panel, and microeconomic-based studies. Also, this paper does not discuss the theory surrounding the role of financial contracts, markets, and intermediaries in economic growth.1 The growing body of empirical research, using different statistical procedures and data sets, produces remarkably consistent results. First, countries with better-developed financial systems tend to grow faster—specifically, those with (i) large, privately owned banks that funnel credit to private enterprises and (ii) liquid stock exchanges. The levels of banking development and stock market liquidity each exert a positive influence on economic growth. Second, simultaneity bias does not seem to be the cause of this result. Third, better-functioning financial systems ease the external financing constraints that impede firm and industrial expansion. Thus, access to external capital is one channel through which financial development matters for growth because it allows financially constrained firms to expand. Each of the different statistical procedures that have been brought to bear on the finance-growth debate has methodological shortcomings, which emphasizes the need for additional research to clarify the relationship between finance and growth. Moreover, data problems plague the study of finance and growth in general. Perhaps the biggest data problem involves the empirical proxies of “financial development,” because it is difficult to construct accurate, consistent measures of financial development for a broad cross-section of countries. Thus, more microeconomic-based studies that explore the possible channels through which finance influences growth will foster a keener understanding of the finance-growth nexus. Without ignoring the weaknesses of existing work and the need for future research, the consistency of existing empirical results across different data sets and statistical procedures suggests that finance plays an important role in the process of economic growth. The body of existing work motivates research

Money and Finance in Economic Growth and Development: Essays in Honor of Edward S. Shaw. Ronald I. McKinnon

<i>Money and Finance in Economic Growth and Development: Essays in Honor of Edward S. Shaw</i>. Ronald I. McKinnon

BOOK REVIEWS

Book Review in this Articles:Public Assistance to Industry. By W. M. Corden and Gerhard FelsOptimization in Economic Theory. By A. K. DixitThe State &amp; Economic Development: Peru Since 1968. By E. V. K. FitzgeraldManagement Strategy &amp; Business Development. Edited by Leslie HannahCapital versus the Regions. By stuart HollandThe Regional Problem. By stuart hollandAid and Inequality in Kenya: British Development Assistance to Kenya. By Gerald Holtham and Arthur HazlewoodThe Economics of Invention &amp; Innovation. By P. S. JohnsonInnovation and New Product Marketing. By David F. MidgleyMarine Policy and the Coastal Community. Edited by Douglas M. JohnstonThe Economics of Social Problems. By Julian Le Grand and Ray RobinsonWhy Poor People Stay Poor. By Michael LiptonThe Path of Economic Growth. By Adolph LoweThe Industrialization of Egypt 1939–1973: Policy and Performance. By Robert Mabro and Samir RadwanMoney and Finance in Economic Growth and Development. Edited by Ronald I. McKinnonEconomic Model Building. By F. Neal and R. ShoneLabour Market Adjustment. By Christopher A. PissaridesThe Soviet Union and Black Africa. By Christopher StevensUnderstanding Econometrics. By Jon StewartProduct Planning: An Integrated Approach. By Merlin Stone