Level Of Financial Development Research Articles

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.

ESG Rating Events, Financial Investment Behavior and Corporate Innovation

The effectiveness of Environmental, Social and Governance (ESG) ratings has been widely discussed in academia and is linked to corporate financial performance. However, the underlying mechanism between ESG rating events and firm innovation in developing countries has not been effectively explored. Taking Chinese A-share non-financial listed companies from 2009 to 2020 as research samples, this paper empirically studies the mechanism of ESG rating events affecting corporate innovation of listed companies. The findings are as follows :(1) ESG performance and ESG rating events with high financial investment behavior can promote corporate innovation; (2) The industrial structure, the level of property rights protection and the level of regional financial development are the main external environmental factors affecting the previous conclusion; (3) Firm scale effect and capital reservoir effect are the main internal firm factors affecting the first conclusion.

The impact of the level of green finance development on corporate debt financing capacity

The study examines the impact of the level of green finance development on the debt financing capacity of heavy polluters and green enterprises in China. Using the entropy value method to calculate the level of green finance development at the region level from 2007 to 2020, we find that the increase in the level of green financial development helps to enhance the debt financing ability of green enterprises, while suppressing the debt financing ability of heavy polluting enterprises, and promotes the transformation of heavy polluting enterprises from the perspective of enterprise debt financing.

Does the diffusion of information and communication technologies affect the shadow economy in Africa?

AbstractThis paper aims to analyze the effect of information and communication technology (ICT) diffusion on the shadow economic activities in Africa for the period from 2000 to 2015. To this end, we use a panel data model on a sample of 48 countries. The results obtained show that the diffusion of ICTs, especially mobile telephony and the Internet, negatively and significantly affect the size of the shadow economy in Africa. The level of education, capital stock, economic growth, and financial development also contribute to reducing the size of the informal economy in Africa. However, our results suggest that informal activities are motivated by the abundance of natural resources and migrant remittances. Robustness checks are done through the system generalized method of moments and a change in the measurement of the shadow economy confirms the validity of the results. We recommend to decision‐makers to implement public policies facilitating the access and the use of new telecommunications tools and services and to improve the institutional framework to encourage private economic agents to invest in formal activities.

Study on high energy-consuming industrial agglomeration, green finance, and carbon emission.

Based on the relationship between industrial agglomeration, green finance development, and carbon emissions, some relevant theoretical hypotheses are proposed, and this paper employs the combination of spatial Durbin model and panel threshold model to empirically test data from 30 provincial regions in China from 2006 to 2019. The results show that the agglomeration of high energy-consuming industries has an inverse U-curve relationship with carbon emission intensity, and the development of green finance will inhibit the growth of carbon emission intensity. There are significant spatial characteristics of high energy-consuming industrial agglomeration, green financial development, and carbon emissions. And the intensity of local carbon emissions will be influenced by the agglomeration of high energy-consuming industrial agglomeration and green financial development in local and neighboring areas. Moreover, green financial development plays a moderating role in the relationship between high energy-consuming industrial agglomeration and carbon emissions, and the role of high energy-consuming industrial agglomeration and green financial development on carbon emissions has a threshold effect due to the mismatch between the two developments. Under different levels of green financial development, the influence of high energy-consuming industrial agglomeration on carbon emissions varies widely, and green financial development helps to suppress the negative impact of high energy-consuming industrial agglomeration on carbon emissions. Accordingly, we argue that inter-regional joint prevention and control mechanism should be established for pollution control. And China should build more effective high energy-consuming industrial clusters to make them play an active role in reducing emissions. At the same time, China should accelerate the construction of green finance, strengthen the disclosure and transparency of green financial information, and establish a joint mechanism for the development of inter-regional green finance, so that it can contribute to regional industrial transformation and pollution control.

How Does Digital Transformation of City Governance Affect Environmental Pollution: A Natural Experiment from the Pilot Policy of “National Information City for Public Service” in China

This article investigated the “National Information City for Public Service” policy as the representative policy of China’s digital transformation of urban governance to empirically analyze its impact on urban environmental pollution using the DID method. The results indicated that: ① The “National Information City for Public Service” policy has significantly reduced the level of urban environmental pollution by 1.65–2.11% on average. After conducting the robustness test of the PSM-DID method and excluding the effect of exogenous interference of the smart city pilot policy in China, the evaluation showed no significant difference from the conclusion above. ② The mechanism test results showed that the “National Information City for Public Service” policy could reduce urban environmental pollution through the technological innovation effect, industrial structure upgrading effect, resource allocation optimization effect, and urban informatization level improvement effect. ③ The heterogeneity analysis of the city scale presented a positive relationship between the city scale and the level of environmental pollution improvement effect under the “National Information City for Public Service” framework. Meanwhile, the heterogeneity analysis of city characteristics showed that cities with better human capital qualities, stronger local government financial strength, and more advanced financial development levels would obtain greater benefit from the environmental improving effect of this policy. Notably, the environmental improving effect of digital transformation of urban governance would be further amplified in cities with the dual superposition of the Innovative City Pilot Policy and the policy of “National Information City for Public Service”. This paper contributed significant referential insights into promoting urban digital transformation and improving urban ecological environment.

Impact of Two-Way FDI on the Industrial Structure in Shandong Province Under the Background of “New and Old Kinetic Energy Conversion”

This paper uses the panel data of 17 cities in Shandong Province from 2003 to 2018 to construct a panel model to empirically study the impact of foreign direct investment (FDI) on the industrial structure. The results show that two-way investment, financial industry development, and policy variables have significant roles in promoting the advancement of the industrial structure in the province. In the future implementation of the “Going Global” strategy in Shandong Province, the cooperation between two-way investment and the financial industry should be strengthened, the level of regional financial development should be improved, and the impact of two-way investment on the optimization and upgrading of the industrial structure should be reinforced.

Does Environmental Credit Rating Promote Green Innovation in Enterprises? Evidence from Heavy Polluting Listed Companies in China.

Environmental credit rating (ECR) is a novel environmental governance tool proposed by China, but its implementation effect is still unknown. This study analyzed whether it achieves the goal of encouraging green innovation in enterprises. Based on the green patent data of listed companies in heavy polluting industries in China from 2010 to 2018, we constructed a heterogeneous timing difference-in-differences model to empirically study the impact of the ECR policy on green innovation. We find that the policy has significantly promoted heavy polluting enterprises’ green innovation. Moreover, the results passed a series of robustness tests. Importantly, we find that the policy has a positive effect on enterprises’ green innovation through the reputation mechanism and financing mechanism. Furthermore, the incentive effect of the policy varies with enterprise characteristics and regional characteristics: the green innovation effect of the policy is more obvious in large-sized and state-owned companies and companies in regions with low fiscal pressure and a high level of financial development are more likely to induce firms’ green innovation. Our research will be of practical value to China’s environmental management, as well as global value to other countries.