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Financial sector development and access to finance. Does size say it all?

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  • Gimet, Céline
  • Lagoarde-Segot, Thomas

Abstract

This paper analyzes what features of financial systems can strengthen the linkages between banks and economic development. We investigate whether a set of banking and capital market characteristics can improve the ability of banks to provide increased credit flows to the private sector, while simultaneously improving financial inclusion for the poor. We analyze the determinants of both macro-level lending conditions and micro-level access to finance using a set of Panel Vector Error Correction Models and GMM estimations in a panel of 138 countries for the 2002–2009 time periods. Results converge to suggest that rather than focusing solely on banking sector size, financial policy should seek to foster inter banks competition, develop appropriate macro-prudential safeguards, promote capital market development. In addition, improved access to finance requires adequate civil rights and support to entrepreneurship.

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  • Gimet, Céline & Lagoarde-Segot, Thomas, 2012. "Financial sector development and access to finance. Does size say it all?," Emerging Markets Review, Elsevier, vol. 13(3), pages 316-337.
    • Handle: RePEc:eee:ememar:v:13:y:2012:i:3:p:316-337
    DOI: 10.1016/j.ememar.2011.11.002
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    8. Chen, Xudong & Yao, Liming & Xu, Zhenye & Xu, Qi, 2018. "Foreign entry and bank competition on financial products in China: A model of bank size," Pacific-Basin Finance Journal, Elsevier, vol. 49(C), pages 43-59.
    9. Vithessonthi, Chaiporn, 2014. "The effect of financial market development on bank risk: evidence from Southeast Asian countries," International Review of Financial Analysis, Elsevier, vol. 35(C), pages 249-260.
    10. Boukhatem, Jamel, 2016. "Assessing the direct effect of financial development on poverty reduction in a panel of low- and middle-income countries," Research in International Business and Finance, Elsevier, vol. 37(C), pages 214-230.
    11. Marín Ana Georgina & Schwabe Rainer, 2013. "Bank Competition and Account Penetration: Evidence from Mexico," Working Papers 2013-14, Banco de México.
    12. Ana Georgina Marín & Rainer Schwabe, 2019. "Bank Competition and Financial Inclusion: Evidence from Mexico," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 257-285, September.
    13. Serigne Bassirou Lo & Lassana Cissokho, 2023. "Financial development, institutions and industrialization in sub‐Saharan Africa," African Development Review, African Development Bank, vol. 35(2), pages 152-164, June.
    14. Jonathan A. Batten & Karren Lee-Hwei Khaw & Martin R. Young, 2014. "Convertible Bond Pricing Models," Journal of Economic Surveys, Wiley Blackwell, vol. 28(5), pages 775-803, December.
    15. Cole, Rebel & Cumming, Douglas & Li, Dan, 2016. "Do banks or VCs spur small firm growth?," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 60-72.
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    17. Lee, Chien-Chiang & Wang, Chih-Wei & Ho, Shan-Ju, 2022. "Financial aid and financial inclusion: Does risk uncertainty matter?," Pacific-Basin Finance Journal, Elsevier, vol. 71(C).
    18. Brahim Gaies & Stéphane Goutte & Khaled Guesmi, 2019. "Does Financial Globalization Still Spur Growth In Emerging And Developing Countries? Considering Exchange Rate Volatility'S Effects," Working Papers hal-01968082, HAL.
    19. Alina Taran & Marilena Mironiuc & Maria-Carmen Huian, 2016. "Examining The Influence Of Some Macroeconomic Factors On Foreign Direct Investments," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 18, pages 159-182, December.
    20. María José Roa & Alejandra Villegas & Ignacio Garrón, 2020. "Effects of interest rate caps on microcredit: evidence from a natural experiment in Bolivia," Development Research Working Paper Series 03/2020, Institute for Advanced Development Studies.
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    22. Folorunsho M. Ajide, 2019. "Remittances, Bank Concentration and Credit Availability in Nigeria," Journal of Development Policy and Practice, , vol. 4(1), pages 66-88, January.

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    More about this item

    Keywords

    Finance; Development; Institutions; GMM; PVEC;
    All these keywords.

    JEL classification:

    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models

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