Financial Intermediation and Growth: Theory and Some Cross-Country Evidence

Well-functioning financial markets can have a positive effect on economic growth by facilitating savings and more efficient allocation of capital. This paper characterises some of the recent theoretical developments that analyse the relationship between financial intermediation and economic growth and presents empirical estimates based on a model of the linkage between financially intermediated investment and growth for two separate groups of countries, developing and advanced. Empirical estimates for both groups suggest that financial intermediation through the efficiency of investment leads to a higher rate of growth per capita. The relevant coefficient estimates show a higher level of significance for the developing countries. This financial liberalisation in the form of deregulation and establishment and development of stock markets can be expected to lead to enhanced economic growth.

Sheepskin Effects in the Returns to Education in a Developing Country

This paper tests for the sheepskin or diploma effects in the rates of return to education in a developing country, Pakistan; presumably the only study for the country that explicitly investigates this important question. One reason for this paucity of work may have been lack of appropriate data on an individual's educational status. The Mincerian log-linear specification of the earnings function is generalized to allow for the possibility that the returns to education increase discontinuously for the years when diplomas/degrees are awarded. This provision is made in three different ways, i.e., by (a) introducing dummy variables for diploma years, (b) by specifying a discontinuous spline function, and (c) by specifying a step function. Empirical evidence based on a nationally representative sample of male earners shows that substantial and statistically significant ' sheepskin effects exist at four important certification levels in Pakistan, namely, Matric, Intermediate, Bachelor's, and Master's. This finding is consistent with the screening rather than the convential human capital view of the role of education. However, it should be noted that while diplomas seem to matter, it is not true that only diplomas matter, since even after controlling for diploma years the schooling coefficient, albeit smaller than before, is still substantial. Again, regarding the diploma effects, another interesting finding is that such effects are not significant in case of the Primary and the Middle levels of schooling. In terms of the policy implications, it follows that, in the case of Pakistan, education is an important and significant influence on the individual earnings. However, to the extent that the diploma effects are significant, the potential for education as a source of enhancing worker productivity is lessened, thus reducing the scope of an activist public policy in this regard. This is particularly true for the Secondary levels of education. In fact, the findings support a reallocation of the available public funds away from the tertiary/higher education and towards the basic education, where the productivity enhancing human capital effects are relatively more apparent.

Mincerian Earnings Function for Pakistan

Due to its central role in various debates about the determinants of individual earnings, the Mincerian earnings function (MEF) as given in Mincer (1974) has attracted the attention of many economists. The MEF has been estimated virtually for every country except Pakistan, where a necessary condition has been missing, i.e., national level data on the exact number of years of schooling completed has not been available; instead, in a majority of the relevant micro-level surveys, schooling has been measured only in terms of a 'categorical' variable with possible values being 'Primary and Incomplete Middle', 'Middle and Incomplete Matric', etc. At best, this data deficiency has restricted the existing estimated earnings functions to what we refer to as the 'Dummies earnings functions' (DEF) since they are constrained to specify schooling in terms of a set of dichotomous dummy variables. Using a nationally representative data on male earners, this study tries to fill the above gap by estimating the MEF both in its 'strict' as well as the 'extended' forms. In terms of the 'strict' MEF, i.e., the one analogous to Mincer's (1974) specification which essentially treats earnings as a function of schooling and job-market experience, the main findings are mat the marginal rate of return to schooling is 8 percent, the experience-earnings profile is consistent with the pattern suggested by the human capital theory and as much as 41 percent of the variance in log earnings is accounted for by the strictly defined MEF. By and large, these findings are consistent with those implied by estimated MEFs for comparable LDCs. Further, the present study also estimates 'extended' MEF, whose specification supplements that of the 'strict' MEF by adding variables to control for urban vs rural background, occupational categories, employment status, and provincial heterogeneity. The 'extended' MEFs are also estimated separately for urban and rural samples and for each province. Formal 'Chow-type F tests' conducted to test for homogeneity of the parameters of MEF across different sub-samples reveal 'pervasive' segmentation across the above strata.

Television and Political Awareness: Measuring the Impact of Political Talk Shows on Political Participation of Students of Lahore

This study explores the impact of television political talk shows on political awareness and political participation of the students of Lahore, Pakistan. For this quantitative research data was collected through a cross sectional survey using the instrument of questionnaire from 12 private and four public sector universities (n=400) through multistage sampling technique. The study measured the relationship between students' level of TV political talk shows viewing and their political knowledge, political awareness and political participation. The statistical tests of regression analysis and mediation were performed using process in SPSS. While testing the hypothesis, it was confirmed that greater exposure to TV talk shows lead to enhanced political knowledge, political awareness and political participation. The study also found that a mediation of political awareness exists between political participation and watching political talk shows