Level Of Financial Development Research Articles

Can Digital Finance Improve Corporate Environmental Performance? Evidence from Heavy Polluting Listed Companies in China

ABSTRACT In the context of the digital transformation of China’s financial system and the synergistic growth of its economic environment, this research explores the impact of digital finance development on the environmental performance of enterprises. Through empirical analysis of data gathered from A-share heavy polluters from 2011 to 2020, our findings show that digital finance effectively improves the environmental performance of heavy polluters. The conclusions remain robust after controlling for endogeneity issues and running a series of robustness tests. The mechanism test reveals that the effects of financing and innovation are important channels through which digital finance influences industrial environmental performance. Furthermore, heterogeneity analysis shows that the beneficial influence of digital finance on the environmental performance of firms is enhanced when firms are smaller, have non-state ownership, are located in East China, and have a lower level of financial development. These findings expand upon the factors that influence corporate environmental performance and provide empirical evidence that heavy-polluting companies should fully grasp the opportunities of digital finance development and improve their environmental performance in order to achieve higher-quality development.

Spatial-temporal Evolution and Influencing Factors of Digital Financial Inclusion: County-level Evidence from China.

The vigorous development of information and communications technology has accelerated reshaping of the financial industry. The COVID-19 pandemic has further catalyzed the demand for digital financial services. Digital financial inclusion relies on information technology to overcome spatial limitations. In this case, the research question is whether it adheres to the spatial laws governing conventional financial activities. This study uses exploratory spatial data analysis and a geographical detector to elucidate the spatiotemporal characteristics and factors influencing digital financial inclusion at the county level in China (Data don't include that of Hong Kong, Macao and Taiwan of China) from 2014 to 2020. The research findings indicate: first, China's county-level digital financial inclusion is generally increasing and exhibits significant spatial autocorrelation. Second, population density, level of traditional financial development, government regulation, and education level are key determinants of China's county-level digital financial inclusion. Third, policies should be differentiated by region to narrow the spatial gap in digital financial inclusion. The results provide a reference for other developing countries on using digital technology to develop financial inclusion.

The Dynamic Nexus Among Energy Diversification and Carbon Emissions in the E7 Economies: Investigating the Moderating Role of Financial Development

ABSTRACT This study investigates the role of financial development in moderating the impact of energy diversification on carbon emissions reduction, using a sample of seven major emerging (E7) economies over the period 1995–2018. A panel cointegration test is employed to investigate any long-run equilibrium relationship among variables. The moderating effect is uncovered using a panel autoregressive distributed lag (ARDL) model. The results from the cointegration test reveal the presence of a long-run equilibrium linkage among financial development, energy diversification, and carbon emissions. The panel ARDL model results indicate that the carbon emissions reduction effect of energy diversification is strengthened by an increased level of financial development in the long-run. Notably, a 1% increase in energy diversification accompanied by a 1% increase in financial development favorably moderates the carbon emissions reduction impact by about 2.11%. This finding is novel and contributes to our understanding of how financial development moderates the carbon emissions reduction effect of energy diversification. Based on this finding, appropriate policy recommendations are suggested to achieve energy transition goals in the E7 economies.

Financial reform and haze pollution: A quasi-natural experiment of the financial reform pilot zones in China

Financial reform becomes a new tool for environmental governance because it can indirectly affect the environment by promoting economic and financial agglomeration and technological innovation. Despite China's aggressive financial reform pilot (FRP) policy since 2012, little is known about whether and how such policy affects haze pollution (HP). We exploit geographic and temporal variations in China's FRP policy and compile a dataset covering 284 cities over the period from 2003 to 2019. Employing a difference-in-differences (DID) approach, we document that China's FRP policy has a negative causal effect on HP in the pilot cities. The estimates obtained from an instrumental variable constructed by religious temples also support the haze-abatement effect of such policy. This effect is largely driven by advances in technological innovation and increases in economic agglomeration, while financial agglomeration is proven to have little effect. Finally, our estimate is particularly pronounced in cities with high levels of economic development, financial development and technological innovation, and that in large-sized and non-mineral resourced cities. Overall, our findings shed light on the importance of financial reform in environmental governance in a developing country.

Governance Quality and Financial Development in Africa

The study examines the effect of governance quality on financial sector development using an empirical panel dataset from 45 African countries for the period 1996–2018. To this end, four bundled governance quality indicators (i.e., general, political, economic, and institutional) variables are employed. The empirical estimation is based on Quantile Regression and other subsidiary Model. The inspiration for this estimation technique is based on the argument that the effect of governance quality is contingent on the existing level of financial development, and governance – financial development policies, to be effective, need to be tailored differently across countries with low, intermediate and high levels of financial sector development. The general findings are as follows: First, development in governance institutions promotes financial sector development. Second, in most of the cases, the impact of governance quality is higher in terms of magnitude in the upper quantiles of the general, political, economic and institutional governance distributions. Third, the effect of governance institutions is significantly higher in terms of magnitude in the top quantiles of the economic governance distribution. The results remain robust over alternative econometric estimation techniques.

Construction enterprises' green financing efficiency and its influencing factors including internal and external: Based on four-stage DEA model.

Under the background of carbon neutrality, green development is the theme of today's times. The construction industry is an important part of the green development plan, and it is of great significance to study its green financing efficiency. Based on this, this paper uses the four-stage DEA model to explore the green financing efficiency of listed construction companies from 2019 to 2020. The conclusion shows that: firstly, the green financing efficiency of listed construction companies is low, and the demand for green financing has not been met. It is necessary to strengthen the support of green finance to meet the needs of its expansion. Secondly, the efficiency of green financing is significantly and complexly affected by external influencing factors. It is necessary to dialectically treat external influencing factors such as local industry development support, financial development level, and the number of patent authorizations. Thirdly, among the internal influencing factors, the proportion of independent directors has a significant positive impact on the green financing efficiency of listed construction companies, and the proportion of R&D investment has a significant negative impact. Listed construction companies need to increase the proportion of independent directors and control the proportion of R&D investment.

Does credit diversification drive banks’ cost of intermediation? An empirical exploration

The disparity between the interest rates on loans and deposits is a widely used indicator of how expensive financial intermediation is for a community. The nations which reflect lower intermediation costs have higher levels of banking penetration and financial development (Gupta et al., 2021). This research examines the impact of credit diversification strategy on cost of intermediation of the Indian commercial banks. Additionally, our study shows the moderating role of bank ownership in this nexus. The static and dynamic estimation of panel data of the banks during the period 2014 to 2020 are carried out to analyse this relationship. Our baseline results refute the findings of Bustaman et al. (2016) and Huynh and Dang (2021) and indicate that the more diversified a bank’s credit portfolio, the higher its cost of intermediation. Besides, the results reflect the effect of credit diversification in inflating the cost of intermediation is less severe for the banks with public ownership. Thus, this research emphasizes while promoting a diversified strategy, regulators and bank managers should carefully evaluate the positive impact of credit diversification on banks’ cost of intermediation with a caution that the positive impact is more severe for private sector banks.

An Empirical Analysis of Inclusive Finance Support to the Development of Rural Revitalization in Linyi

This research adopts the coefficient of variation method to construct Linyi inclusive financial development index and rural revitalization index. According to the standard of international inclusive financial development level, when the inclusive financial development index is between 0 and 1, it indicates that inclusive financial development in the region is from a low level to a high level. The research finds that the degree of inclusive financial development in Linyi is different. Apart from Lanshan District, the level of inclusive financial development in other districts and counties is low, with the unstable inclusive financial development index between 0.01 and 0.15 in most years. After measuring the rural revitalization index, it is found that the Linyi's rural development is better and the regional development is more balanced. Through empirical analysis, the research comes to a conclusion that inclusive finance can effectively promote the rural revitalization in Linyi. Based on the above analysis, the paper puts forward the following suggestions: Linyi should optimize the layout of financial resources, improve the rural financial ecological environment, perfect the credit system of farmers, improve the quality of financial services, and increase the investment in agriculture, forestry and water to guide the upgrading of agricultural industry structure.

Impact of Political Risk on Foreign Direct Investment with Fourier Approach: The Case of Turkiye

Foreign direct investment (FDI) is a desirable form of capital inflows to emerging and developing countries. Such investments are less susceptible to crises and sudden breakdowns. Therefore, foreign direct investment between the political risks of using annual data for the years 1984-2019 which might influence Turkey has been tested. For this purpose, Fourier-based unit root and cointegration analysis are used. As a result of the Fourier unit root analysis, it is concluded that the FDI variable is difference stationary and the political risk variable is level stationary. For this reason, Yılancı et al. (2020), a fractional-frequency Fourier bootstrap autoregressive distributed lag (ARDL) boundary test was applied to the literature. This test, which is in nonlinear form, captures smooth transitional changes in long-term relationships. As a result of the analysis, it is seen that there is a cointegration relationship between foreign direct investments and political risk and the variables come to equilibrium in the long run. In addition, it is seen that the calculated long-term coefficient is positive and significant and the error mechanism works correctly in the short term. Therefore, as political stability is achieved foreign direct investment inflows will increase and the economies of the country will gain an advantage in reaching high levels of financial development. As a result, it is concluded that the Weak Partisan model is valid in the Turkish economy.

Does Green Credit Policy Promote or Inhibit Firms’ Green Innovation in China? Moderating Effect of Environmental Information Disclosure

Green credit policy (GCP) serves as an important tool for environmental protection and economy development. However, conflicting evidence exists regarding its role in affecting firms’ green innovation. China’s GCP practice provides an opportunity to explore this issue in the context of developing economies. Taking the implementation of the “Green Credit Guidelines” in China in 2012 as an exogenous shock, this paper adopts the difference-in-differences (DIDs) method to separately explore GCP’s effect on green innovation of non-heavily polluting firms (non-HPFs) and heavily polluting firms (HPFs). Based on the microdata of Chinese firms from 2008 to 2020, this study finds that: (1) GCP promotes green innovation of non-HPFs, but inhibits green innovation of HPFs. (2) GCP’s promoting effect on green innovation of non-HPFs is more prominent in large-sized firms, regions with a higher financial development level, and regions with a higher pollution level. (3) GCP’s inhibiting effect on green innovation of HPFs is less prominent in regions with higher financial development level. (4) Environmental information disclosure (EID) strengthens GCP’s promoting effect on green innovation of non-HPFs. Overall, these findings help practitioners to better understand the impact of GCP on firms’ green innovation in developing countries.

Research on the Relationship between Cash Holding and Business Credit in the View of Supply Chain

This paper analyzes the relationship between corporate cash holdings and commercial credit from the perspective of supply chain, selects 1162 listed companies from 2017 to 2021 as sample objects, analyzes the impact of corporate commercial credit on cash holdings, and discusses the regulatory role of regional financial development level on this impact. The final result shows that there is a significant positive correlation between business payables, i.e. business credit obtained by enterprises, and cash holdings; There is a significant negative correlation between enterprise receivables, i.e. business credit provided by enterprises, and enterprise cash holdings.

Financial development, financial instability, and fiscal policy volatility: International evidence

This paper investigates the effects of financial development and financial instability on fiscal policy volatility using system GMM estimator based on panel data of 96 countries from 1990 to 2019. We find that higher levels of financial development are associated with lower fiscal policy volatility, but an increase in financial instability would lead to greater volatility in fiscal policy. We also find that the harmful effect of financial instability on fiscal policy conduct would be alleviated in the normal phase of the financial cycle but would be magnified during expansionary, recessionary and crisis periods. This paper extends the existing literature by highlighting the role of finance in fiscal policy volatility, where a large and stable financial system is conducive to the smooth conduct of fiscal policy.

Spatio-temporal evolution and location factors of port and shipping service enterprises: A case study of the Yangtze River Delta

As an important link in the global network of value chains and supply chains, the evolution of the function of modern ports depends on changes in the distribution of freight volume and shipping routes among ports, along with changes in terms of interdependence and spatial differentiation between various port and shipping service enterprises (PSSEs), such as shipping companies, multimodal transport providers, freight forwarders, and shipping financial institutions. On the basis of defining the connotation of PSSEs, this study takes the Yangtze River Delta as a research case and uses the three-axis rotation method, standard deviational ellipse, and spatial interpolation simulation to analyse the distribution pattern and evolution characteristics of PSSEs from 2002 to 2019. The discrete regression model was used to explore the main factors affecting the location choice of various PSSEs. The characteristics of the spatial and temporal evolution of PSSEs in the Yangtze River Delta are as follows: (1) The structure of the PSSEs in the Yangtze River Delta is in the process of continuous upgrading. It presents a ‘medium-high-low’ pattern in which medium-end enterprises are dominant, and high-end enterprises are increasing rapidly. (2) The spatial distribution of low- and high-end enterprises is concentrated, and medium-end enterprises are more dispersed. The distribution centre of medium- and low-end enterprises moves westward, while the distribution centre of high-end enterprises turns eastward. (3) The growth rates of medium- and high-end enterprises are much higher than those of low-end enterprises. The analysis of location factors based on the conditional logit model demonstrates that the factors affecting PSSEs are becoming increasingly complex. Besides the influence of traditional location factors such as the economy and transportation of the hinterland, they are also affected by emerging factors such as informatization and the level of financial development. Moreover, the impact of external factors, such as globalization, marketisation, and servitisation, is also rising significantly.

The development fit index of digital currency electronic payment between China and the one belt one road countries

Central bank digital currency is one of the most important financial innovations in the global economy. However, the understanding of its cross-border application is insufficient. This study analyses the driving and supporting factors that affect the application of China’s digital currency electronic payment system in One Belt One Road countries. Using country-level data for 2019, this study proposes a systematic development fit index, consisting of six first-level indicators and 41 proxy variables. The index value shows that fit is determined by bilateral investment, bilateral trade, level of financial development, geopolitics, economic foundation and infrastructure development. Among the sample One Belt One Road countries (average index value 56.39), Malaysia (83.98), Singapore (80.5), Thailand (78.76), Russia (76.25) and the United Arab Emirates (75.48) have the most potential to participate in the new monetary system launched by China. The results provide practical implications for Chinese and OBOR governments in making related strategies.

Nonlinear Effects of Economic Policy Uncertainty Shocks on Carbon Emissions in China: Evidence from Province-Level Data

Based on cross-sectional data from 30 Chinese provinces from 2004 to 2017, this paper systematically examines the nonlinear effects of economic policy uncertainty (EPU) on carbon emissions and its causes using the PSTR model. It is found that the impact of EPU on carbon emissions at the provincial level in China has significant nonlinear characteristics and shows a positive and then negative pattern as the level of EPU increases. Furthermore, increased levels of EPU also cause a nonlinear migration of the effects of provincial economic and financial development, industrial structure, government spending, and environmental regulation on carbon emissions, illustrating a large amount of heterogeneity among Chinese provinces. Specifically, provinces with higher levels of economic and financial development experience a greater positive carbon emission effect from EPU, whereas provinces with lower levels of such development experience a greater negative carbon emission effect. In contrast, in provinces with irrational industrial structures, lower fiscal expenditures, and weaker environmental controls, the nonlinear carbon emission consequences of EPU are greater. Therefore, local governments should prudently adjust economic policies, improve and perfect the market information disclosure system, and afford full play to regional comparative advantages to help achieve the "double carbon goal".

Exchange rate volatility, corruption, and economic growth

This study assesses the impact of exchange rate volatility on economic growth using a panel of 194 countries for the period 1995–2019. We resort to dynamic panel data models considering the exchange rate volatility estimated based on GARCH models as an explanatory variable, along with some control variables such as the level of economic openness and financial development, investment, government spending, and the expected level of education. Countries are grouped according to the level of corruption of the governments. The estimates from both Difference and System Generalized Method of Moments are obtained. The results consistently show a significant negative effect of exchange rate volatility on economic growth, which diminishes as the financial system develops. An important finding is that the effect of volatility is lower in high-corruption countries, which could be because they are used to dealing with the economic instability associated with low levels of governance and incorporate it as part of their costs.

Regional financial development, spatial spillover and capitalization of pig breeding

ABSTRACT Based on the relevant statistical data of 30 Chinese provinces from 2007 to 2020, the spatial spillover effect of the impact of financial development on the capitalization of hog farming was analysed by establishing a spatial Durbin model based on the capitalization of hog farming in China.The results show that the level of regional financial development has a facilitating effect on the capitalization of hog farming.Meanwhile, the results of decomposition effects show that the regional financial development level has a negative spillover effect on capitalized farming of hogs.The reason for this negative externality may be the siphoning effect of the developed financial industry areas on the capital and non-fixed farming factors in the surrounding areas.

Nexus Among Innovations, Financial Development and Economic Growth in Developing Countries

Studying the level of economic growth remains a topic of discussion among economists and policymakers. As economic growth further impacts the socioeconomic development of the country. The present study has investigated the impact of innovations and financial development on economic growth in case 58 developing counties from 2000 to 2020. To analyze the stationarity of the variables LLC, ADF-Fisher, IPS, and PP-Fisher unit roots have been used. This study uses a panel autoregressive distribution lag co-integration approach and a vector error-correction model for short-run dynamics of the model. For investigating the causal relationship among the variable’s variance decomposition and impulse response function have been applied. The outcomes of the study show that innovations, availability of physical capital, and trade have a positive and significant impact on economic growth. Financial development has significant but inverse influence on economic growth. It is suggested that for higher economic growth, developing countries improve the threshold level of financial development and use an innovative process of production. Urbanization and inflation hurt economic growth. Thus, developing countries should promote a stable inflation rate with liberalized trade, innovation, and physical capital to enhance economic growth.

Financial development and economic growth in Botswana: New evidence from disaggregated data

Abstract In this study, the causal relationship between financial development and economic growth in Botswana is re-examined using disaggregated data from 1980 to 2020 on financial development. The importance of financial development and economic growth in achieving Sustainable Development Goals (SDGs) cannot be overemphasised. The study used the Autoregressive Distributed Lag (ARDL) approach to cointegration and the ECM-based Granger causality test to examine this linkage. Financial development is measured at an aggregate level by the Financial Development Index (FDI) and at a disaggregate level by the Financial Institution Index (FII) and Financial Market Index (FMI) from the International Monetary Fund (IMF) financial development index database. The study failed to find any causality between financial development and economic growth during the study period. The results apply, irrespective of proxy used to measure the level of financial development and the time frame. This finding points to the importance for Botswana to continue with the Vision 2036 and the National Development Plans that focus, among other goals, on economic growth, to realise an increase in gross fixed capital formation and financial development.

Information and communication technologies development and the resource curse

Information and communication technologies (ICTs) influence economic growth, yet, innovation in natural resource development and energy demands is seldom considered. Will the development of ICTs aid in alleviating this natural resource curse? An analysis of time-series data from 30 Chinese provinces confirms this effect, and this finding is especially robust. In particular, some Chinese regions are affected by an abundance of natural resources. Computing, telephone, cellular connections, and incentives for technological collaboration result in greater energy demands and, thus, greater CO2 emissions. In short, ICT growth somewhat alleviates the resource curse. This effect is heterogeneous in terms of the level of regional financial development and the presence of a resource curse in the location. Policymakers seeking to develop long-term, nationwide e-sustainable strategies must then lower natural resource prices and pollution abatement costs through technologically driven natural resource expansion.