World Bank Funding Research Articles

Sand or grease effect? The impact of Islamic banking on the social mission of microfinance institutions

PurposeIslamic banking and microfinance institutions (MFIs) share the core objective of serving the underprivileged. This study aims to investigate whether Islamic banking development facilitates (greases) or hinders (sands) the social mission of MFIs.Design/methodology/approachData for 19 countries covering the period 2010–2018 were collected from the World Bank, Bank Focus and International Monetary Funds and analyzed using conventional econometric methods. Endogeneity-corrected techniques and alternative proxies were employed to ensure robust results.FindingsThe study revealed that Islamic banking development (proxied by the size of the Islamic banking assets) weakens the depth of outreach of MFIs (measured by average loan size). In countries with growing Islamic banking, MFIs appear to shift their focus toward wealthier clients, potentially due to market saturation among the poor. This is evidenced by MFIs offering larger loans, suggesting a mission drift toward profit maximization. Therefore, it can be inferred that competition from Islamic banks, to some extent, erodes the social mission of MFIs.Originality/valueThis study is among the few to examine the recent and comprehensive relationship between Islamic banking development and the social mission of MFIs.

Financial Development and Income Inequality in Nigeria: Testing the Financial Kuznets Curve Hypothesis

This study aims to investigate the link between financial development and income inequality in Nigeria, considering the potential existence of a financial Kuznets curve in Nigeria from 1986 to 2022. The study uses datasets from the World Bank and International Monetary Fund Database. It employs the Augmented Dickey-Fuller (ADF), Phillips-Perron (PP), Zivot-Andrews (ZA), ARDL bounds testing approach, and the Toda-Yamamoto causality test to determine the direction of causality between the two variables. The study finds evidence of an inverted U-shaped relationship between financial development and income inequality, potentially supporting the Financial Kuznets curve hypothesis in Nigeria. Additionally, the results of the Toda-Yamamoto causality test show a unidirectional causality running from financial development to income inequality. The findings have significant implications for economic development and social stability in Nigeria, emphasizing the need for targeted policies to mitigate the potential adverse effects of financial development on income inequality. This study fills a gap in existing research by examining the financial Kuznets curve in Nigeria and accounting for structural breaks, thus contributing valuable insights to the ongoing debate on finance and inequality.

Effects of energy price shock on the macroeconomic indicators of India: a new measure

Purpose The purpose of this study is to construct a new index to assess the impact of an energy price shock on macroeconomic indicators of India. This paper also shows a comparative analysis of the constructed index along with pre-existing World Bank and International Monetary Fund indices on energy. Design/methodology/approach This paper uses three vector autoregressions and compute the long-term impact of the indices on the considered macroeconomic variables through impulse response functions. Findings This paper finds that an energy price shock has a detrimental impact on the macroeconomic indicators of India in the long run. This study also finds that the constructed index acts as a relatively more sensitive index in comparison to the International Monetary Fund and World Bank indices, which is bespoke to a developing economy case. This sensitivity is ascribed to dynamic weighting for a different basket of energy components, which are more pertinent to an Indian context. Originality/value The novelty of this research lies in the construction of a new index and its comparison to the existing ones. This study justifies why a developing economy would require a different measure of energy as opposed to the existing indices.

The dynamic nexus between agricultural productivity and renewable energy consumption in BRICS: the role of financial inclusion and foreign direct investment

Purpose This study aims to examine the impact of renewable energy consumption on agricultural productivity while accounting for the effect of financial inclusion and foreign direct investment in Brazil, Russia, India, China and South Africa (BRICS) countries during 2000–2020. Design/methodology/approach The study has used the latest data from World Bank and International Monetary Fund databases. The dependent variable in the study is agricultural productivity. Renewable energy consumption, carbon emissions, financial inclusion and foreign direct investment are independent variables. Autoregressive distributed lag (ARDL) approach was used to examine the short-run and long-run impact of renewable energy consumption, carbon emissions, foreign direct investment and financial inclusion on agricultural productivity. Findings The findings imply that consumption of renewable energy, carbon emissions and foreign direct investment have a positive impact on agricultural productivity while financial inclusion in terms of access does not seem to have any significant impact on agricultural productivity. Providing farmers, access to financial services can be beneficial, but its usage holds more importance in impacting rural outcomes. The problem lies in the fact that there is still a gap between access and usage of financial services. Research limitations/implications Policymakers should encourage the increase in the usage of renewable energy and become less reliant on non-renewable energy sources which will eventually help in tackling the problems associated with climate change as well as enhance agricultural productivity. Originality/value Most of the earlier studies were based on tabular analysis without any empirical base to establish the causal relationship between determinants of agricultural productivity and renewable energy consumption. These studies were also limited to a few regions. The study is one of its kind in exploring the severity of various factors that determine agricultural productivity in the context of emerging economies like BRICS while accounting for the effect of financial inclusion and foreign direct investment.

Cost of mate choice: Changing patterns of global age disparity in marriage and their consequences to women's health including maternal mortality and menopause.

Consistent across cultures and throughout time is the male preference for younger females. Given its prevalence, the mate choice theory proposes that age-disparate relationships may have contributed to the evolution of maternal mortality and menopause. The objective is to document evidence for age disparity in marriage from past and present populations and evaluate their relevance to maternal mortality and menopause. Cross-sectional data were collected from various regions and time points, ranging from the Roman era to the current decade. To analyze both the age disparity in marriage and age at marriage, data were collected from Ancestry.ca for Quebec, Massachusetts, India, South Africa, and England and Wales. Additional data were taken from the United Nations as a more recent and comprehensive source. To analyze the relationships between age disparity in marriage and different social factors, data on gross domestic product, maternal mortality rates, fertility, primary school enrollment, child marriage rates, and percentage of women in the total labor force were collected from the World Health Organization, World Bank, and United Nations International Children's Emergency Fund. The results showed that males were significantly older than females at first marriage in all populations and time frames sampled, supporting the assumption underlying the mate choice theory. Maternal mortality rates were strongly associated with age-disparate relationships, increasing by 275 per 100,000 live births for each additional year in the age disparity. The results from this study provide support for the assumption underlying the mate choice theory of maternal mortality and menopause.

Are the UN Sustainable Development Goals a Valuable Platform for Advancing a Basic Income? A Critical Historical Studies Account

Abstract United Nations (UN) leaders suggest that the world is not on track to meet the Sustainable Development Goals (SDGs) by 2030. The purpose of this paper is to explore whether the SDGs provide a valuable platform to call for a basic income (BI) globally. Adopting a critical historical studies approach, the article traces the evolution of ‘development’, including the UN decades of development, the Millennium Development Goals, and the SDGs. It subsequently describes the structural adjustment and poverty reduction efforts by the World Bank and International Monetary Fund, and then outlines why the SDG framework may be helpful in advancing a BI. We argue that as climate-related disasters increase, a BI will be vital in providing a modicum of security in an increasingly unstable world. Calls for BI must be anchored to a broader change agenda that recognizes the causes of poverty and income inequality, and seeks their dismantling and redress.

Examining the relationship between public debt and private consumption in European OECD countries (2011–2020)

<abstract> <p>This study examined the impact of public debt on private consumption in 26 European Organization for Economic Co-operation and Development (OECD) member countries from 2011 to 2020. Analyzing data from OECD, World Bank, and International Monetary Fund reports, we employed various statistical methods, including correlation analysis, linear regression, fixed effect, random effect, and the Generalized Method of Moments model via the Arellano-Bond estimation approach. Our findings indicated that public debt, foreign direct investments, inflation, and gross domestic product (GDP) growth positively influence private consumption, while gross fixed capital formation and exports of goods and services have a negative impact. The study underscores the need for careful consideration of the repercussions of public debt on citizens' daily lives, especially in terms of private consumption, emphasizing the crucial need for policymakers to consider the delicate balance between public debt management and sustainable economic growth in OECD countries for shaping effective economic policies that foster responsible debt management to support long-term economic development.</p> </abstract>

Exploring Indicators Impacting Gross Domestic Product: A Case of the Gulf Cooperation Council Members

This study investigates the factors that influenced the economic growth of the six Gulf Cooperation Council (GCC) members from 1990 to 2021. The study employed statistical methods such as ordinary least squares (OLS), fixed-effects model (FEM), and generalized method of moments (GMM) regressions to arrive at its findings. The World Bank and International Monetary Fund (IMF) databases provided the data for this paper. The six Gulf Cooperation Council members are the United Arab Emirates (UAE), the Kingdom of Saudi Arabia, the State of Qatar, the Sultanate of Oman, the State of Kuwait, and the Kingdom of Bahrain. In fact, the economies of Gulf Cooperation Council members (countries) are highly dependent on the oil sector. Therefore, one of the main positive indicators of gross domestic product in the Gulf Cooperation Council countries is oil prices. In addition, inflation plays a significant and positive role in supporting the gross domestic product in the Gulf Cooperation Council area. In contrast, unemployment rates and the COVID-19 pandemic impacted the gross domestic product in the Gulf Cooperation Council region significantly and negatively. The implications of this study help policymakers make the right decisions and implement policies to increase economic growth in Gulf Cooperation Council countries. Furthermore, this study supports economists and academics in conducting their research in the same field.

THE IMPACT OF GOVERNANCE STRUCTURES ON ECONOMIC GROWTH IN AFRICA: A PANEL DATA ANALYSIS OF 47 AFRICAN COUNTRIES

Major international institutions like the World Bank, African Union, and International Monetary Fund have made the development of robust governance systems a “sacred utterance” since the 1990s. Our study aimed to refute this common thinking by examining how governance structures have affected the expansion of the financial market in 47 African countries from 2008 to 2019. Using the availability of venture capital as a proxy for financial market development, our article departed from existing literature which used stock exchange characteristics as benchmarks for growth in the financial market. The governance variables comprise the six global governance indices: control of corruption, government effectiveness, political stability, regulatory quality, the rule of law, and voice and accountability. The model’s control variables include GDP per capita, inflation, and trade openness. Our finding suggests that a great quality governance climate is significant in explaining the growth of the financial market in Africa using the generalized method of moments (GMM) methodological approach with corrected standard errors. Considering these findings, our research makes the case that solid institutional frameworks might encourage the degree of financial systems growth in Africa. Therefore, the financial development rate in the African region will be significantly influenced by improving the quality of governance through strengthening legal and institutional frameworks to facilitate financial inclusion.

Role of International Organisation in Shaping the global governance

International organizations play a pivotal role in shaping global governance by fostering cooperation, facilitating diplomacy, and addressing transnational challenges. As influential actors, these organizations, such as the United Nations, World Bank, and International Monetary Fund, serve as platforms for dialogue, negotiation, and policy coordination among nations. They contribute to the development of norms, regulations, and standards, promoting stability and sustainable development on a global scale. Through collaborative efforts, international organizations help address complex issues like climate change, economic inequality, and health crises, thereby influencing the trajectory of global governance and fostering a more interconnected and cooperative world.

Data transparency and GDP growth forecast errors

This paper examines the role of data transparency in explaining gross domestic product (GDP) growth forecast errors - the difference between forecasted and realized growth. On average, a one standard deviation increase in the log of a country’s Statistical Capacity Index, a measure of data capacity and transparency, is associated with a decline in absolute forecast errors by 0.44 and 0.49 percentage points for World Bank and International Monetary Fund (IMF) forecasts, respectively. The role of the overall data ecosystem, not just elements related to growth forecasting, is important for forecast accuracy. The study also establishes that forecast errors are large, the Middle East and North Africa region has the largest forecast errors among the world regions, and World Bank forecasts are more accurate and less optimistic than those from the IMF and the private sector.

IMPACT OF EXTERNAL DEBT ON FINANCIAL DEVELOPMENT: AN EMPIRICAL ANALYSIS OF SELECTED EAST ASIAN AND PACIFIC COUNTRIES

This article explores the impact of external debt on financial development in a group of fifteen selected East Asian and Pacific countries from 1992 to 2021. These countries include Cambodia, China, Fiji, Indonesia, Lao PDR, Mongolia, Myanmar, Papua New Guinea, the Philippines, Samoa, the Solomon Islands, Thailand, Tonga, Vanuatu, and Vietnam. Data were extracted from the World Bank and International Monetary Fund databases. This study employs random effects and fixed effects models, Driscoll-Kraay standard errors, and the generalized method of moments to test two hypotheses. The results indicate that external debt has a positive impact on the financial development of these East Asian and Pacific countries, where economic growth plays a vital role in promoting financial development. Additionally, a nonlinear impact of external debt on the financial development of these East Asian and Pacific countries is observed. Based on these findings, it is recommended that appropriate financial development policies be implemented in the identified countries.

BRICS, World Bank and IMF Quest to Promote Economic Development of Countries

The term “BRICS” represents a group of five emerging economies of Brazil, Russia, India China and South Africa, which started in 2009. These economies have caught the attention of literally everyone--international financial law practitioners, political scientists, countries, international organizations and other stakeholders. The emergency of a unified geopolitical bloc, started to reframe international financial outlook with a new set of new ideas and values. include reforming the global financial and economic architecture, strengthening the principles and standards of international law in many sectors of their economies. The paper highlights prospects and challenges that lie ahead of BRICS countries to fully realize their mandate and to co-exist with the World bank and International Monetary Fund (IMF). The World Bank and IMF have supported economic development of countries since their inception, I however do not see any harm posed by the introduction of more capital from BRICS, it should be received with both hands. There are looming prospects for expansion of BRICS, countries like Argentina, UAE, Mexico, Algeria and Saudi Arabia have indicated their desire to jump on BRICS bandwagon, the current Russian-Ukraine war remains a big challenge, not least that it has threatened to suck in all BRICS members into this war. The paper finds that as global dynamic challenges continue to mutate, nothing should preclude countries from working together to find lasting solutions to their common challenges. Some BRICs Nations are also beleaguered with high levels of corruption in public offices, they will need to seriously address this challenge, if they are to offer a robust development agenda for emerging markets to supplant the Bretton Wood Institutions. This paper was written, guided by three specific objectives: (i) Examine the rationale for launching the BRICS development initiatives and potential conflict with the World Bank and IMF. (ii) Discuss the mandate of the World Bank and IMF in fostering economic development especially developing countries. (iii) Explore potential areas of conflict between the Bretton Wood Institutions and BRICS to co-exist in their varied development mandates towards member countries. The paper has established that while nothing precludes BRICS offering alternative funding mechanisms to their members, they will need time to fully realize their objectives. Establishment of the BRICS signifies that its high time the World Bank and International Monetary Fund (IMF) have adopted desired reforms, if they are to remain influential today.

Financial Development, Financial Market, and Financial Institutional on International Trade in Developing Eight Countries

This study aims to analyze the effect of financial development, financial market, and financial institutional on international trade in developing eight countries, with foreign exchange reserves, foreign direct investment, and real gross domestic product as control variables. This research includes descriptive quantitative research. The population used is eight developing countries. The data in this study is secondary data sourced from World Bank and International Monetary Fund (IMF) reports observation period from 2011 to 2020. The research model uses the panel data regression analysis method (Ordinary Least Square) through the Eviews 10 program. The results show that financial development has a positive and significant effect on international trade in D-8 countries, while financial markets and financial institutional have a significant negative effect on international trade in D-8 countries.

Pengaruh Financial Development Terhadap International Trade Dengan Foreign Exchange Reserves Sebagai Moderasi: Studi Negara D-8

This study aims to analyze the influence of the financial development index on international trade in D-8 countries and examine whether foreign exchange reserves as a moderation variable are able to moderate the relationship between financial development and international trade in D-8 countries. This study included quantitative research with secondary data types sourced from the world bank and international monetary fund in the observation period from 2011 to 2020. The population in this study is a member of the Developing Eight Countries, with a sampling technique using purposive sampling. This research method uses panel data regression (ordinary least square) and moderated regression analysis (MRA) interaction test through the Eviews 10 program. The results showed that if there is a positive and significant influence between financial development and international trade, similar results are also found in foreign exchange reserves, which are used as moderation variables that significantly affect international trade. Meanwhile, the variable interaction of financial development and foreign exchange reserves has a negative influence on international trade in D-8 countries

Neoliberalism, ‘honour’-based regulatory frameworks of accounting and accountability in a social context: An examination of the role of accounting in the management of subsidies on petroleum products in Nigeria

Nigeria subsidises the cost of petroleum products for its citizens, but corruption means that the cost is rising and to maintain the subsidy, Nigeria has sought financial support from international financial institutions, such as the World Bank and International Monetary Fund. However, this support is contingent on neoliberal economic policy reform, in which the World Bank calls for the removal of petroleum product subsidies and the implementation of Western ‘honour’-based regulatory frameworks, that is, International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSAS), to improve transparency and accountability. Considering endemic corruption in the Nigerian cultural and socio-political context, where political elites can override any rule and politicians, public officials, and professionals can intentionally manipulate accounting records, we examine the limits of governance/accounting frameworks and explore the boundaries of accountants’ oversight function. In particular, we discuss the impact of ‘honour’-based regulatory frameworks, such as IFRS and IPSAS, on transparency and accountability in the Nigerian oil and gas sector and in the government subsidy programme. This study challenges the neoliberal assumption that Western ‘honour’-based IFRS and IPSAS, widely adopted in developed countries where fraud is rare, can improve transparency and accountability in developing economies like Nigeria, where corruption is endemic.

Anaysis of Interest Rate Spread, Financial Development and Foreign Capital Inflow Nexus in Nigeria

ABSTRACT: The world has gone through various economic crises in the past century, and their effects have had varying implications on the economies of countries all over the world. In a bid to help stabilise economies all over the world, various measures have been put in place. Some of these measures include regulations and policies by the Bretton Woods institutions (World Bank and International Monetary Fund) and their agencies. The idea behind these measures is to ensure sustainable growth and development among member states and other countries of the world. Some of these policies include the privatization and liberalization policies of the Bretton Woods institutions as well as other policies bordering on such economic and social benefits for people all over the world. The Nigerian economy in our contemporary time can be described as passing through a rather 'volatile' phase with respect to interest rate, financial development and foreign capital inflow. Thus, this study investigated the impact of interest rate spread and financial development on foreign capital inflow in Nigeria. Several studies have been carried out using different methodologies, such as; co-integration equation, multivariate vector auto regressive (VAR) model and vector error correction technique. Each methodology used was in line with the objective of the research in question. However, to achieve its objective, this paper adopted the Classical Linear Regression Model. The results of the study showed that financial development has a positive impact on foreign capital inflow, while interest rate spread on the other hand, was also found to have a positive impact on foreign capital inflow. Other control variables such as market capitalization and treasury bills rate were also found to positively affect foreign capital inflow, while the all share index had a negative impact on foreign capital inflow. Some economists have opined that the Nigerian economy is currently going through a phase of recession. In order for large scale investments to be made within the country, there is a need for foreign participants to be attracted to the Nigerian economy and pull their resources, both financial and non-financial into the country (but, not without regulation). However, for these investors to have confidence to make investments in the Nigerian economy, there has to be a high degree of economic stability in the country. This can be supported by enacting and implementing policies that can enhance the quality of interest rates spread and financial development within the country. The policy implication here involves enhancing financial development through sound policies and adopting competitive interest rates, could increase the rate of foreign inflow into the economy. In view of this, it is also recommended that government policies should target interest rate competitiveness, financial and economic development as well as sustainability.

European Integration Processes in EECCA: Dependencies and Drivers

The study was conducted using comparative quantitative and qualitative analysis of World Bank and International Monetary Fund data for 1989-2020 and 2000-2020. Two-factor linear econometric models of economic growth in 11 countries of Central and Eastern Europe (depending on their exports and debt) were built on the basis of such analysis. The study also relied on data from the Pew Research Center's Spring 2019 Global Attitudes Survey regarding EU citizens’ attitudes toward integration. The research findings were used to examine the causes and consequences of European integration for the countries of Central and Eastern Europe. Since 2004, when the first wave of EU enlargement took place, the combined weight of the economies of Central and Eastern Europe in relation to the EU has increased from 6.7% to 10.8% in 2020. On the other hand, none of the countries that have joined the EU have reached Europe-wide labor productivity. Assessment of the possible accession of other countries of the former eastern bloc revealed that Kazakhstan, where productivity in 2020 reached 58.4% of the average achieved in the EU, has the most enabling economic environment. In this context, Kazakhstan outperformed Bulgaria, where such a parameter amounted to 53.5%. During 1995-2000, the multiple of the ratio between the minimum and maximum levels of per capita GDP in the group of countries under study ranged from 6.3 to 7.7 times. Fifteen years after the first wave of accession to the EU, this figure has decreased to 2.5 times. Proposals to reduce regional economic inequality based on the econometric models have been developed.

Effect of Financial Innovation on Money Demand in the East African Community

Tremendous financial changes have been witnessed in the East African Community’s (EAC’s) macroeconomic landscape over the past few years. These changes can shift various parameters of the money demand model. Many previous empirical studies examined the effect of scale and opportunity cost of holding money variables on money demand. However, most of them left out financial innovation which is one of the key factors influencing money demand. Additionally, they are just country specific studies and used time series data analysis technique. It is in this backdrop that a cross-country case study that investigates how financial innovation affects money demand function was carried out using the recent data and a different analysis technique which is panel data analysis. The objective of the study was to examine the effect of mobile financial innovation on money demand in the EAC. The study used secondary data for the period 2007 to 2020 and this data was obtained from the World Bank and International Monetary Fund. Both descriptive and inferential analyses were carried out. Levin-Lin-Chu test for panel unit root was done and all the study variables were found to be stationary at level. The results of balanced panel fixed effects regression analysis indicated that mobile money, ATMs, and real GDP were affecting money demand positively and their effects were also statistically significant. However, interest rate affected money demand negatively. Mobile money and ATMs were proxies for financial innovation whereas real GDP and interest rates were control variables. Therefore, it was observed that financial innovation has had a positive effect on money demand in the EAC. The findings of this study might be of great importance to monetary authorities and policy makers in the EAC. Future research studies can expand the period of study similar to this one and also increase the number of countries involved.

SSP economic growth projections: Major changes of key drivers in integrated assessment modelling

GDP scenarios are major drivers of climate change and climate change mitigation assessment studies. In this paper, a major update of the SSP GDP projections is presented. By using the most recent economic data and short-term projections by the World Bank and International Monetary Fund, the update captures changes in the system of national accounting and purchasing power parities, as well as the impact of the Covid 19 pandemic. Harmonization between the data and the original end-of-the century SSP projections was carried out in terms of GDP per capita in order to preserve the underlying narrative of income convergence. The result is a set of projections compatible with the most recent data and the SSP narratives. A comparison of DICE models calibrated to the original and updated SSP2 GDP per capita projections illustrates how significant the impact of an update of income data on integrated assessment results can be. The estimated global social costs of carbon in 2015 and 2030 rose by almost 30%.