Advanced Search
MyIDEAS: Login

Flow of funds: implications for research on financial sector development and the real economy

Contents:

Author Info

  • Christopher J. Green

    (Department of Economics, Loughborough University, Loughborough, UK)

  • Victor Murinde

Abstract

This paper provides a selective survey of the leading theoretical and empirical issues surrounding the flow of funds: its meaning and origin, problems of construction, its use in financial modelling and its role as a tool of analysis of intersectoral financial flows. It is argued that there is an intimate connection between the flow of funds, interest rates and asset prices, and hence incomes and expenditures in an economy. The paper discusses flow of funds analysis in the context of developing countries, concentrating on possible applications and methodologies, and the issue of data collection and organization. We explore the reasons for lack of success at empirical flow of funds modelling and propose 'promising research ideas' (PRIs) to apply flow of funds analysis to study the relationship between financial sector development and the real economy, particularly to identify effective financial sector policies in developing countries. Copyright © 2003 John Wiley & Sons, Ltd.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://hdl.handle.net/10.1002/jid.961
File Function: Link to full text; subscription required
Download Restriction: no

Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Journal of International Development.

Volume (Year): 15 (2003)
Issue (Month): 8 ()
Pages: 1015-1036

as in new window
Handle: RePEc:wly:jintdv:v:15:y:2003:i:8:p:1015-1036

Contact details of provider:
Web page: http://www3.interscience.wiley.com/journal/5102/home

Related research

Keywords:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bollerslev, Tim & Engle, Robert F & Wooldridge, Jeffrey M, 1988. "A Capital Asset Pricing Model with Time-Varying Covariances," Journal of Political Economy, University of Chicago Press, vol. 96(1), pages 116-31, February.
  2. Hendry, David F. & Pagan, Adrian R. & Sargan, J.Denis, 1984. "Dynamic specification," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 18, pages 1023-1100 Elsevier.
  3. Breeden, Douglas T., 1979. "An intertemporal asset pricing model with stochastic consumption and investment opportunities," Journal of Financial Economics, Elsevier, vol. 7(3), pages 265-296, September.
  4. Merton, Robert C, 1973. "An Intertemporal Capital Asset Pricing Model," Econometrica, Econometric Society, vol. 41(5), pages 867-87, September.
  5. Martin Feldstein & Charles Horioka, 1979. "Domestic Savings and International Capital Flows," NBER Working Papers 0310, National Bureau of Economic Research, Inc.
  6. Benjamin M. Friedman, 1980. "How Important is Disaggregation in Structural Models of Interest Rate Determination?," NBER Working Papers 0294, National Bureau of Economic Research, Inc.
  7. Aivazian, Varouj A. & Callen, Jeffrey L. & Krinsky, Itzhak & Kwan, Clarence C. Y., 1990. "Risk versus return in the substitutability of debt and equity securities," Journal of Monetary Economics, Elsevier, vol. 26(1), pages 161-178, August.
  8. Honohan, Patrick & Atiyas, Izak, 1989. "Intersectoral financial flows in developing countries," Policy Research Working Paper Series 164, The World Bank.
  9. Green, Christopher J, 1990. "Asset Demands and Asset Prices in the U.K.: Is There a Risk Premium," The Manchester School of Economic & Social Studies, University of Manchester, vol. 58(3), pages 211-28, September.
  10. Tobin, James, 1982. "Money and Finance in the Macroeconomic Process," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 14(2), pages 171-204, May.
  11. Cashin, Paul & McDermott, C John, 1998. "Testing the Consumption-CAPM in Developing Equity Markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 3(2), pages 127-41, April.
  12. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December.
  13. Anke Hoeffler & Catherine A. Pattillo & Paul Collier, 1999. "Flight Capital as a Portfolio Choice," IMF Working Papers 99/171, International Monetary Fund.
  14. Sen, K. & Roy, T. & Krishnan, R. & Mundlay, A., 1993. "A Flow of Funds Model for India and Its Implications," Papers 85, Indira Gandhi Institute of Development Research-.
  15. Van Wijnbergen, S., 1983. "Interest rate management in LDC's," Journal of Monetary Economics, Elsevier, vol. 12(3), pages 433-452, September.
  16. Smith, Gary, 1981. "The Systematic Specification of a Full Prior Covariance Matrix for Asset Demand Equations," The Quarterly Journal of Economics, MIT Press, vol. 96(2), pages 317-39, May.
  17. J. Copestake & S. Bhalotra & S. Johnson, 2001. "Assessing the Impact of Microcredit: A Zambian Case Study," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(4), pages 81-100.
  18. Sharpe, Ian G, 1973. "A Qtrly Econometric Model of Portfolio Choice-Part I: Specification and Estimation Problems," The Economic Record, The Economic Society of Australia, vol. 49(128), pages 518-33, December.
  19. Paul Mosley, 1999. "Micro-macro linkages in financial markets: the impact of financial liberalization on access to rural credit in four African countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 11(3), pages 367-384.
  20. Friedman, Benjamin M, 1977. "Financial Flow Variables and the Short-Run Determination of Long-Term Interest Rates," Journal of Political Economy, University of Chicago Press, vol. 85(4), pages 661-89, August.
  21. P. Mosley, 2001. "Microfinance and Poverty in Bolivia," The Journal of Development Studies, Taylor and Francis Journals, vol. 37(4), pages 101-132.
  22. Friedman, Benjamin Morton, 1977. "Financial Flow Variables and the Short-Run Determination of Long-Term Interest Rates," Scholarly Articles 4554309, Harvard University Department of Economics.
  23. Smith, Gary N & Brainard, William C, 1982. " A Disequilibrium Model of Savings and Loan Associations," Journal of Finance, American Finance Association, vol. 37(5), pages 1277-93, December.
  24. Backus, David & Purvis, Douglas, 1980. "An Integrated Model of Household Flow-of-Funds Allocations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 12(2), pages 400-421, Special I.
  25. Barker, Terry & van der Ploeg, Frederick & Weale, Martin, 1984. "A Balanced System of National Accounts for the United Kingdom," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 30(4), pages 461-85, December.
  26. Friedman, Benjamin M, 1980. "How Important Is Disaggregation in Structural Models of Interest Rate Determination?," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 271-76, May.
  27. Smith, Gary, 1975. "Pitfalls in Financial Model Building: A Clarification," American Economic Review, American Economic Association, vol. 65(3), pages 510-16, June.
  28. Frankel, Jeffrey A, 1985. "Portfolio Crowding-out, Empirically Estimated," The Quarterly Journal of Economics, MIT Press, vol. 100(5), pages 1041-65, Supp..
  29. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
  30. Roley, V Vance, 1983. "Symmetry Restrictions in a System of Financial Asset Demands: Theoretical and Empirical Results," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 124-30, February.
  31. Buffie, Edward F, 1991. "Credit Rationing and Capital Accumulation," Economica, London School of Economics and Political Science, vol. 58(231), pages 299-316, August.
  32. Green, Christopher J & Kiernan, Eric, 1989. "Multicollinearity and Measurement Error in Econometric Financial Modelling," The Manchester School of Economic & Social Studies, University of Manchester, vol. 57(4), pages 357-69, December.
  33. James Tobin, 1963. "Commercial Banks as Creators of 'Money'," Cowles Foundation Discussion Papers 159, Cowles Foundation for Research in Economics, Yale University.
  34. Barr, D G & Cuthbertson, Keith, 1991. "Neoclassical Consumer Demand Theory and the Demand for Money," Economic Journal, Royal Economic Society, vol. 101(407), pages 855-76, July.
  35. Courakis, Anthony S, 1988. "Modelling Portfolio Selection," Economic Journal, Royal Economic Society, vol. 98(392), pages 619-42, September.
  36. Buiter, Willem H, 1980. "Walras' Law and All That: Budget Constraints and Balance Sheet Constraints in Period Models and Continuous Time Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 1-16, February.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Moore, Tomoe & Green, Christopher J. & Murinde, Victor, 2006. "Financial sector reforms and stochastic policy simulations: A flow of funds model for India," Journal of Policy Modeling, Elsevier, vol. 28(3), pages 319-333, April.
  2. Barend de Beer & Nonhlanhla Nhlapo & Zeph Nhleko, 2010. "A perspective on the South African flow of funds compilation - theory and analysis," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The IFC's contribution to the 57th ISI Session, Durban, August 2009, volume 33, pages 239-248 Bank for International Settlements.
  3. Tomoe Moore & Christopher Green & Victor Murinde, 2005. "Portfolio Behaviour in a Flow of Funds Model for the Household Sector in India," The Journal of Development Studies, Taylor and Francis Journals, vol. 41(4), pages 675-702.
  4. Zeph Nhleko, 2010. "Handling systems challenges from the compilation of flow of funds - the case of South Africa," IFC Bulletins chapters, in: Bank for International Settlements (ed.), The IFC's contribution to the 57th ISI Session, Durban, August 2009, volume 33, pages 434-440 Bank for International Settlements.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:wly:jintdv:v:15:y:2003:i:8:p:1015-1036

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.