The financial development and growth nexus: A meta-analysis

We conduct a meta-analysis of the literature of financial development and economic growth. We cover a large number of empirical studies and estimations that have been published in journal articles. We measure the degree of heterogeneity and indentify the causes of the observed differentiation. Our results suggest that although evidence of publication bias is present, a genuine effect exists between financial development and economic growth.This is the accepted manuscript. The final version is available from Wiley at http://onlinelibrary.wiley.com/doi/10.1111/joes.12086/abstract

Regional financialisation and financial systems convergence: Evidence from Italy

The term ‘financialisation’ has now entered the lexicon of academics and policy makers, though there is still no agreement on its meaning and significance. One of the earlier definitions was in relation to the growing weight of financial motives, financial actors and markets in the operation of modern economies, both at the national and international level, from the early 1980s until today. Building on this definition, this paper sheds further light on the implications of spatial financialisation, which has been associated with the over and under-extension of credit across and within countries and evolving financial instability. The paper’s primary contribution is to extend in a robust manner a powerful panel data convergence testing methodology to analyse the spatial scale and temporal evolution of Italian regional lending conditions. The paper concludes that financial divergence has broadly increased in Italian regions. Furthermore, we are able to link regional financialisation to the growing north–south divide in a significant and meaningful way. As a result, the ability of southern regions in Italy to absorb adverse macroeconomic and financial shocks has been weakened. Relevant regional financial policies have thereby become very important. This is the author accepted manuscript. The final version is available from SAGE Publications via https://doi.org/10.1177/0308518X1666419

Regional Integration of Equity Markets in Sub-Saharan Africa

Equity markets in developing and emerging economies have grown in number and importance as a result of financial market globalisation. However, their role in economic growth and development is enhanced if nascent markets are integrated with well-established ones. Market integration, measured by the transmission of returns volatility, is identified across a sample of SSA countries, using a unique dataset. Evidence for potential integration between financial markets in Sub-Saharan Africa (SSA) is found. Spillovers are found across markets, some unidirectional and others bi-directional. However, continued illiquidity and incomplete institutions indicate that an integrated financial community remains premature, and considerable regulatory reform and harmonisation will be necessary for this to succeed

The effects of financialisation and financial development on investment: Evidence from firm-level data in Europe

In this paper we estimate the effects of financialization on physical investment in selected western European countries using panel data based on the balance-sheets of publicly listed non-financial companies (NFCs) supplied by Worldscope for the period 1995-2015. We find robust evidence of an adverse effect of both financial payments (interests and dividends) and financial incomes on investment in fixed assets by the NFCs. This finding is robust for both the pool of all Western European firms and single country estimations. The negative impacts of financial incomes are non-linear with respect to the companies’ size: financial incomes crowd-out investment in large companies, and have a positive effect on the investment of only small, relatively more credit-constrained companies. Moreover, we find that a higher degree of financial development is associated with a stronger negative effect of financial incomes on companies’ investment. This finding challenges the common wisdom on ‘finance-growth nexus’. Our findings support the ‘financialization thesis’ that the increasing orientation of the non-financial sector towards financial activities is ultimately leading to lower physical investment, hence to stagnant or fragile growth, as well as long term stagnation in productivity

The finance-investment and saving-funding circuit in the closed and open economies with government

This contribution discusses the Finance-Investment and Saving-Funding (FISF) circuit regarding the closed and open economies with government. Moreover, we discuss the fiscal policy effects on aggregate demand and income in the FISF circuit context. Keynes explained the FISF circuit assuming a closed economy without government. The novelty of the current contribution is to analyze the above-mentioned circuit in the closed and open economy context including government. We show that the basic features of the FISF circuit remain unchanged for the closed and open economies when government is considered in the circuit.This work was supported by CNPQ (the Brazilian federal reserach funding agency) and FAPEMIG (a state research funding agency in Minas Gerais)