Search

This paper examines the effect of financial deregulation on economic growth in Nigeria using annual data from 1986 to 2016. An index was used to capture financial deregulation. The index was generated using Principal Component Analysis from six variables namely: bank denationalisation, restructuring and interest rate liberalisation, prudential regulation, directed credit abolition, free entry into banking and capital market liberalisation. Johansen Cointegration test and Error Correction Model (ECM) were used to analyze the effect financial deregulation on economic growth. The result shows that there is long run relationship between financial deregulation and economic growth. Furthermore, the result reveals that financial deregulation has positive effect on economic growth both in the short run and long run, but the effect is not significant in the short run. The error correction term shows that the model corrects its short run disequilibrium by 35% annually.

Current account imbalances, now manifested as intensified trade wars between countries, have recently received much attention from researchers. This article reviewed this global issue from a new perspective complementary to the existing research. The study proposed a simple economic model and discovered that the current account balance is inversely proportional to the ratio of income to consumption inequality. This ratio combines all consumption smoothing schemes that depend on political interventions that can alleviate increases in income inequality. In the long run, however, current accounts could be consequently affected by a short-sighted policy. [ABSTRACT FROM AUTHOR]

The financialisation literature has grown over the past decades. Despite a generally accepted definition, financialisation has been used to describe different phenomena. We distinguish between financialisation of non-financial companies, households and the financial sector and use activity and vulnerability measures. We identify seven financialisation hypotheses in the literature and empirically investigate them in a cross-country analysis for 17 OECD countries and two time periods, 1997–2007 as well as 2008–17. We find different financialisation measures are only weakly correlated, suggesting the existence of distinct financialisation processes. There is strong evidence that financialisation is linked to asset price inflation and correlated with a debt-driven demand regime. Financial deregulation encourages financialisation. There is limited evidence that market-based financial systems are more financialised. Foreign financial inflows do not seem a main driver. We do not find indication that an investment slowdown precedes financialisation. Our findings suggest financialisation should be understood as a variegated process, playing out differently across economic sectors and countries. [ABSTRACT FROM AUTHOR]

This article examines the effects of regulatory reform on productivity growth in the Bangladesh banking industry. We use a unique balanced panel dataset comprising bank-level annual data from the early deregulation year (1984) to the most recent available period (2012) from major commercial banks in Bangladesh. Applying the Färe-Primont index, the paper provides estimates of productivity growth and identifies sources of total factor productivity (TFP) change. Empirical results show the sample banks have experienced positive TFP change after the financial deregulation. On average, TFP growth is higher in private banks than their public sector counterparts in the post-reform period. In addition, the decomposition analysis shows technological progress is the main driver of productivity change. Similar results are obtained by using the stochastic frontier analysis (SFA). Thus, empirical results remain robust irrespective of the methodology used. The regression analysis finds a positive technical change in the first stage of the reform program, i.e. during the transition period, as leading banks employ advanced technology to compete with potential new entrants. The result also shows that the banking industry still remains concentrated within the state-owned banks. [ABSTRACT FROM AUTHOR]

This article examines the politics of capital control liberalisation through an archival analysis of Britain's exchange controls abolition. While the political economy consensus states that capital controls were abandoned because of a desire to boost the competitiveness of national financial centres and the ascendance of laissez-faire ideas, this article will challenge this interpretation. The James Callaghan and Margaret Thatcher governments were concerned by the worsening performance of British industrial exporters, and exchange control abolition constituted a strategy to depreciate sterling and thus boost export competitiveness. Yet this beggar-thy-neighbour strategy risked spooking global markets and provoking a run on sterling. Thus, the Thatcher administration publicly masked its intentions by emphasising that this deregulation was motivated by laissez-faire ideology. This article thus reconceptualises the role of competition and ideas in spurring capital control liberalisation by demonstrating the importance of industrial competitiveness and the role of ideas as rhetoric. [ABSTRACT FROM AUTHOR]

The main scope of the paper is to investigate the proposition that rising income inequality results in systemic financial instability in developed countries. In particular, 33 OECD (Organization for Economic Co‐operation and Development) countries are studied in a panel Vector Autoregression (VAR) framework analysis over 1995–2015. There is a growing literature on the effects of income inequality on financial crises. This study provides significant evidence in favour of a positive relationship between income inequality and financial fragility, when particular factors are controlled for. Complementary findings also suggest that (a) debt accumulation in the private sector significantly depends on credit expansion, (b) the debt levels of the private sector and households co‐move over time, and (c) financial deregulation significantly contributes to financial instability. Therefore, policymakers should take into account regulatory reforms that will promote institutional and financial innovations to restrict debt accumulation and render the financial system more robust to destabilising shocks. [ABSTRACT FROM AUTHOR]

This paper examines the effect of financial deregulation on economic growth in Nigeria using annual data from 1986 to 2016. An index was used to capture financial deregulation. The index was generated using Principal Component Analysis from six variables namely: bank denationalisation, restructuring and interest rate liberalisation, prudential regulation, directed credit abolition, free entry into banking and capital market liberalisation. Johansen Cointegration test and Error Correction Model (ECM) were used to analyze the effect financial deregulation on economic growth. The result shows that there is long run relationship between financial deregulation and economic growth. Furthermore, the result reveals that financial deregulation has positive effect on economic growth both in the short run and long run, but the effect is not significant in the short run. The error correction term shows that the model corrects its short run disequilibrium by 35% annually. [ABSTRACT FROM AUTHOR]

The problem of low investment caused by mismanagement of the financial deregulation process is a worrisome issue that needs to be addressed. Data spanning 46 years from 1970 to 2016 and which are relevant to variables of study like gross fixed capital formation, etc were gathered from secondary sources and analyzed using the Auto-Regressive Distribution Lag model. The result showed that both financial deregulation and investment growth have a long-term but negative significant impact on economic development. The paper recommends amongst others that the deregulation process needs to be properly sequenced into the financial system. [ABSTRACT FROM AUTHOR]

Within the financialisation literature, a number of approaches identify the coexistence of financial expansion and productive stagnation. Yet there is no consensus on which direction causality operates between these two phenomena. This impasse has been widened by the lack of attention paid to the role of statecraft strategies in mediating possible causal mechanisms. This article contributes to rectifying this shortcoming by focusing on the governance advantages granted to states through financial deregulation. By presenting archival evidence on Britain’s 1971 Competition and Credit Control deregulation, this article lends support to financialisation accounts that argue that weaknesses in the productive economy spurred financial expansion, yet it also indicates that the state’s desire for depoliticised forms of governance played a crucial role in mediating this relationship. This further suggests that International Political Economy should focus on thestrategicmanner in which states relate to markets. [ABSTRACT FROM AUTHOR]

Whereas many scholars have concluded that neoliberalism as well as deregulation was among the key causes of the financial crisis of 2008, much less work has been This is a comparative study of the political justification of financial deregulation, examining two spectacular cases: the repeal of Glass-Steagall in 1999 and the passing of the Commodity Futures Modernization Act in 2000. There was a widespread, outspoken uncertainty about the consequences of financial deregulation in the 1990s public debates. Building upon Mark Blyth's seminal work on economic ideas, this article traces the free market ideas and rhetoric that were invoked to reduce this uncertainty about financial derivatives and deregulation, thereby serving as an enabling factor for deregulation. [ABSTRACT FROM AUTHOR]

A atuação do Federal Reserve System - Fed - durante a formação e estouro da bolha imobiliária mostra as dificuldades de um banco central em processos financeiros de grande magnitude. O Fed foi leniente com o desenvolvimento da bolha, por considerar que a alta do preço dos imóveis ajudava a reduzir os riscos de instabilidade financeira gerados pelas crises de 2000-2002. Quando a crise do mercado subprime se tornou aguda, em setembro de 2008, o Fed atuou agressivamente como emprestador de última instância, expandindo a base monetária para conter os riscos de inadimplência generalizada no mercado interbancário. Nos dois momentos, o Fed agiu com pragmatismo e discricionariedade, contrariando as teses dominantes do "Novo Consenso", mas foi "prisioneiro" dessas teses e dos interesses do mercado financeiro: a tese de que a desregulamentação dos mercados favorece a sociedade inibiu iniciativas intervencionistas para restringir as inovações financeiras no mercado imobiliário; a tese de que o mandato da Autoridade Monetária deve ser a estabilidade de preços contribuiu para a leniência com os riscos crescentes nos mercados financeiros.The Fed's actions during the development and burst of the US real estate bubble highlight a Central Bank's dilemma when facing a financial process of great magnitude. During the bubble's development and growth, the Fed was lenient since it considered that the increase in real estate prices helped reduce the risk of financial instability brought on by the financial crisis from 2000 to 2002. When the subprime crisis surfaced, the Fed started to act vigorously as a lender of last resort, with a vigorous expansion of the monetary basis in order to defend the system from the risk of a widespread default in the interbank market. In both cases the Fed was pragmatic and discretionary, and did not follow the mainstream thesis in economics analysis, the so called "New Monetary Consensus". However, at the same time, the US Central Bank is a "prisoner" of these thesis and of the financial interests that help it sustain them: the thesis that the financial market's deregulation benefits the entire society inhibited interventionist actions that would have restrained the new financial instruments in the housing market and the thesis that the main goal of the Monetary Authority should be price stability contributed to the leniency with the increasing risks in the financial markets.

How did the deregulation of U.S. bank activities affect the patterns of cross-border lending to emerging economies? Unlike bank lending from Europe or Japan, U.S. bank lending to emerging economies exhibited increasing volatility over time. Using U.S. cross-border bank exposure data, this study identifies a temporal association between important deregulation initiatives and the volatility of U.S. bank emerging market lending. This association is explained by the linkages between an important outcome of bank deregulation－earnings volatility from diversified bank activities－and the rising volatility. Together, it argues that U.S. banking deregulation had unanticipated effects of exacerbating the volatility of bank lending to emerging economies.

The 2007 financial crisis has affected Southern European companies (Spanish, Portuguese, Italian and Greek) more than others. From a Minskyan bubble-burst cycle perspective (Minsky, 1986), we study the relation between institutional ownership structure and corporate risk-taking for a sample of non-financial listed companies from Spain, Portugal, Italy and Greece for the period 2001–2014. Our results suggest that the financial deregulation process, that lead to the financialization of the world economy before the 2007 financial crisis and the favourable macroeconomic scenario encouraged corporate risk-taking in those countries. We also find that the lack of effective control mechanisms provided an incentive for investment funds to assume a proactive role, encouraging companies to overinvest in risky projects. [ABSTRACT FROM AUTHOR]

In the three decades leading up to the financial crisis of 2008/09, income inequality rose across much of the developed world. This has led to a vigorous debate as to whether widening inequality was somehow to blame for the crisis by driving private sector credit booms. Despite growing interest, empirical evidence on an inequality- fragility relationship is limited. Based on a panel analysis of 18 OECD (Organisation for Economic Co-operation and Development) countries for the years 1970-2007, this study provides evidence of a positive relationship between income concentration and private sector indebtedness, once other traditional drivers are controlled for. If confirmed, the implications of this result are as follows: (i) the view that the distribution of income is irrelevant to macroeconomic stability, as implicit in mainstream approaches, needs further investigation; and (ii) in order to make the financial system more robust, policy makers should cast the net wider than monetary policy and regulatory reforms and consider the effects of changes to distributive patterns. [ABSTRACT FROM AUTHOR]

In recent years, the pace of financial deregulation in Australia has accelerated. Less reliance on direct controls, a floating currency and a less regulated banking system will all serve to transform the Australian financial system, but what will this imply for policymakers? The present article addresses the question from a monetary policy viewpoint and establishes some of the difficulties that policy makers are likely to face as the system evolves. Perhaps the most crucial test facing authorities is the need to strike an ‘appropriate’ balance between preserving the stability of the payments system and ensuring competitive equity between financial intermediaries, bank and non-bank. JEL: E52

During and after the Central Committee's Third Plenum in November 2013, China announced farreaching reforms in the spheres of marketization and economic deregulation that included financial markets. While the speed of the rollout of China's planned reforms is still unknown, officials repeatedly reference the great opportunities for guiding China onto a healthier, more sustainable social and economic track. The risks of such ambitious marketization and deregulation plans need to be considered in the context of speed and sequencing of reforms of the financial sector. [ABSTRACT FROM AUTHOR]

In this paper, I examine how the lending relationships between banks and their borrowers affect the quality of analysts' earnings forecasts after financial deregulation in Japan. My findings show that short-term lending relationships improve the quality of analysts' earnings forecasts and that these earnings forecasts are useful for predicting future returns. In contrast, long-term lending relationships decay the quality of forecast and are not valuable for the prediction of future returns. These empirical results indicate that the informational advantage that commercial banks acquire is short-term and that the costs of lending relationships surpass the informational benefits in the long run. [ABSTRACT FROM AUTHOR]

The current financial crisis is the 19th such crisis in the post-war period in advanced economies. Recent literature classifies the Nordic crises in Norway, Sweden and Finland in late 1980s and early 1990s among the Big Five crises that have happened before the current crisis, which is now of a global nature. This paper outlines the developments of the Nordic crises, reasons behind them and crisis management by the authorities. Relatively more emphasis is placed on the Finnish crisis, as it was the deepest one. The paper concludes by considering the lessons that can be drawn from the Nordic crises. [ABSTRACT FROM AUTHOR]

Copyright of Transformations in Business & Economics is the property of Vilnius University and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

This article investigates the financial deregulation, economic uncertainty and the stability of money demand (M1 & broad money (BM)) in Australia for the periods between 1976:2 and 2008:4. We use Johansen procedure of cointegration to estimate the long-run stationary relationship between Australian monetary aggregates and the explanatory variables. We use generalised autoregressive conditional heteroscedasticity (1, 1) model to construct an economic uncertainty index. The results suggest that there is evidence of long-term relation between money (M1), economic activity, interest rate and price for the pre-deregulation subperiod. However, there is no evidence of long-run equilibrium relation between real M1 and its determinants for the baseline specification. However, the model with uncertainty index confirms a stable long-run relationship. Moreover, we found no cointegration relation among BM, real GDP and long-term interest rate for post-regulation and for the entire sample for the traditional money demand equation. However, we have consistent evidence of long-run equilibrium relation between BM, real activity and short-term interest rates for subperiods and for the entire sample period when we account for economic uncertainty. [ABSTRACT FROM AUTHOR]

Americans searching for improved performance and productivity have been lured by deregulation, efficiency, competition, and privatization for over three decades. Along the way, regulations, effectiveness, and collaborative governance have evaporated. As a result, there have been three major crises in the financial arena: the savings and loan crisis, the predatory financial activities here collectively termed risky business, and the Great Recession. This article analyzes these crises and the regulatory resets implemented to deal with them. It also explores how to achieve more optimal financial regulation and governance in the future. [ABSTRACT FROM AUTHOR]

This study is explanatory in nature which deals with the present time economic crisis. The paper tries to explain the origin and main reasons of crisis along with its impact on social and economic sectors at both global and national levels. This financial meltdown has started in the USA and soon spreaded to other economies and had the trickle-down effect which compelled all major economies like France, Germany, Japan, UK, EU to pour in money to save their economies. This paper considered boom and bust in the housing market, higher risk loans to higher risk borrowers, securitization practices, speculation and government policies to be the important causes of global recession. In the paper, we have compared the economic position of various countries and also discussed the data base of the export and import sector of Indian economy for the last three years. According to the paper, the economic crisis will severely affect the weaker economy in terms of less spending, lower incomes, job cuts and unemployment. Indisputably, the present global financial crisis not only affected developed but also developing countries including India and China. Further, India's response to such crisis is also assessed in detail and in the end of this paper some pragmatic measures have been proposed which may be helpful for India's growth and development. [ABSTRACT FROM AUTHOR]