The presentation discusses different ways that the financial sector can contribute to economic growth. It further discusses other dependencies to economic development.
Financial Markets - Money market-Organized and Unorganized-Sub markets
Capital market- Primary market-IPO-FPO- NFO, Book Building-Right Issue-Private placement- Bonus issue-Buyback
Secondary Market-Stock exchanges- Role and functions of Stock Exchanges- BSE-NSE.
Regulatory authorities and their functions – RBI, SEBI
For Videos use the links below
0 Course Introduction:: https://www.youtube.com/watch?v=9km4aXTus5c
1 Financial system and Environment : https://www.youtube.com/watch?v=BC2bAftm43c
2 Participants in a Financial System: https://www.youtube.com/watch?v=IEv_y7_aR7o
3 Functions of a Financial System: https://www.youtube.com/watch?v=T73-Dd8RM4I
4 Financial System and its components: https://www.youtube.com/watch?v=ovkAjEO8YAw
5 Efficiency of a financial system: https://www.youtube.com/watch?v=8xEUtvKYvPc
Financial system and markets:
objectives of financial system-
Concepts of financial system-
Financial concepts-
Development of financial systems in India-
Weakness of Indian financial system
Presentation on "Capital Market"
1.definition and characteristics
2.function and players
3.importance/role and types
4.factor and structure
5.reforms and development
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
Financial Markets - Money market-Organized and Unorganized-Sub markets
Capital market- Primary market-IPO-FPO- NFO, Book Building-Right Issue-Private placement- Bonus issue-Buyback
Secondary Market-Stock exchanges- Role and functions of Stock Exchanges- BSE-NSE.
Regulatory authorities and their functions – RBI, SEBI
For Videos use the links below
0 Course Introduction:: https://www.youtube.com/watch?v=9km4aXTus5c
1 Financial system and Environment : https://www.youtube.com/watch?v=BC2bAftm43c
2 Participants in a Financial System: https://www.youtube.com/watch?v=IEv_y7_aR7o
3 Functions of a Financial System: https://www.youtube.com/watch?v=T73-Dd8RM4I
4 Financial System and its components: https://www.youtube.com/watch?v=ovkAjEO8YAw
5 Efficiency of a financial system: https://www.youtube.com/watch?v=8xEUtvKYvPc
Financial system and markets:
objectives of financial system-
Concepts of financial system-
Financial concepts-
Development of financial systems in India-
Weakness of Indian financial system
Presentation on "Capital Market"
1.definition and characteristics
2.function and players
3.importance/role and types
4.factor and structure
5.reforms and development
The study is on the effect of Net capital inflow on inclusive growth in Nigeria. This study seeks to deepen the understanding on how capital inflow creates opportunity for inclusive growth in Nigeria through increase in GDP per capita. The objective of the study were to : determine the effect of Net capital inflow , Net foreign direct investment and trade openness on inclusive growth in Nigeria. The study employed the time series data in its analysis. The period of analysis spanned through 1980-2015 and the dataset required for the analysis were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin and National bureau of statistics publications. The study conducted trend analysis, descriptive analysis. The data were also tested for stationarity using the Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) analytical techniques, cointegration test and error correction mechanism. It was evident from the unit root test that the variables were fractionally integrated while the cointegration test reveals that long run relationship exists among the variables. The findings equally reveal that capital inflow exerts significant negative influence on GDP per capita. This could be attributed to the problem of managing external capital flows which has been sub-optimal in most developing economies including Nigeria. The implication of this finding is that the perceived benefits that are associated with capital inflows tend not to hold sway in Nigeria over the sampled period which may be attributed to institutional and governance failure. Owing to the findings, this study recommends for the adoption of investment friendly policies and ensure transparency and good governance, appropriate economic management practices capable of supporting reforms in the Nigerian financial system and guide international capital inflows to ensure that the associated economic turnarounds are people-centered.
Interaction of islamic banking sector with indonesian economic growth for 200...An Nisbah
Abstract: This paper aims to analyze the dinamics interaction of islamic banking sector with Indonesian economic growth for 2000-2010. The methode of analyze used in this research is granger causality and Vector Error Correction Model (VECM). Besides that we use stationary test to chek wether the data have unit root or not. We use time series data of total islamic bank fnancing, fxed invesstment, trade and gross
domestic product. We found that in the short run there is evidence of
bidirectional relationship between fnancing of islamic bank, fxed
investment, trade and economi growth. Where as in the long run
there is relationship between islamic banking with economic growth
on Indonesian economy. To improve the role of islamic banking on
Indonesian economy, Bank Indonesia must push islamic banking to
expand their activity on riil sector and rural area.
Keywords: Islamic Banking sector, Financial Intermediary, Economic
Growth, Vector Error Corrrection Model
The presentation describes the relation between Financial development and growth in Emerging Market Economies. It is primarily based on abstract. However, one can contact me for further details.
Fiduciary or paper money is issued by the Central Bank on the basis of
computation of estimated demand for cash. Monetary policy guides the Central
Bank’s supply of money in order to achieve the objectives of price stability (or low
inflation rate), full employment, and growth in aggregate income.
Financial sector has always been potential ingredient in bringing growth in an economy, the indirect impact of
financial markets and institutions through saving mobilization and credit expansion is of extraordinary importance.
By employing Autoregressive Distributed Lags (ARDL) approach impact of financial sector on economic growth of
Tanzania is examined. The results show that, in both long-run and short-run, financial development exerts significant
but negative effect on economic growth contrary to our expectations. The study employs the ratio of broad money to
GDP (financial depth) as a proxy measure of financial development, along with inflation rate, real interest rate, real
exchange rate, share on of investment to GDP, proportion of development expenditure to total expenditure and
dummy for structural reforms as control variables during our estimations. Results also suggest non-existence of
causality between financial development and economic growth. Thus the study suggests strengthening data
availability on flow of credit from financial institution to the public is necessary to materialize the effect of financial
sector in Tanzania
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Does Bank Credit Have Any Impact on Nigeria’s Domestic Investment?iosrjce
There is an extensive literature on the role of the bank lending and credit facilities in Nigeria but
most of these literature concentrate on its impact on the gross domestic product. This study focuses on the
impact of Nigeria’s banking sector on domestic investment from 1980 to 2012 bearing in mind that funding is
one of the major challenges of domestic entrepreneurs in Nigeria. A domestic investment model was adopted
and the unit root test was first applied to the data set. All the data are stationary and the ordinary least square
method was used to identify the impact of capital market activities on domestic investment in Nigeria using the
cointegration technique. Findings reveal that bank credit negatively though significantly impacted on domestic
investment in the long run while its short run impact is both positive and significant. This is an indication that
financial intermediation (captured by bank credit to private sector) is a strong driver of domestic investment in
Nigeria only in the short run. The study thus recommends amongst others, the strengthening of Nigeria’s
banking system with more funds and supervisions as well as the encouragement of both foreign and domestic
investments through government’s creation of a more conducive political and economic climate.
Similar to Financial Institutions and Economic Development (20)
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Financial Assets: Debit vs Equity Securities.pptxWrito-Finance
financial assets represent claim for future benefit or cash. Financial assets are formed by establishing contracts between participants. These financial assets are used for collection of huge amounts of money for business purposes.
Two major Types: Debt Securities and Equity Securities.
Debt Securities are Also known as fixed-income securities or instruments. The type of assets is formed by establishing contracts between investor and issuer of the asset.
• The first type of Debit securities is BONDS. Bonds are issued by corporations and government (both local and national government).
• The second important type of Debit security is NOTES. Apart from similarities associated with notes and bonds, notes have shorter term maturity.
• The 3rd important type of Debit security is TRESURY BILLS. These securities have short-term ranging from three months, six months, and one year. Issuer of such securities are governments.
• Above discussed debit securities are mostly issued by governments and corporations. CERTIFICATE OF DEPOSITS CDs are issued by Banks and Financial Institutions. Risk factor associated with CDs gets reduced when issued by reputable institutions or Banks.
Following are the risk attached with debt securities: Credit risk, interest rate risk and currency risk
There are no fixed maturity dates in such securities, and asset’s value is determined by company’s performance. There are two major types of equity securities: common stock and preferred stock.
Common Stock: These are simple equity securities and bear no complexities which the preferred stock bears. Holders of such securities or instrument have the voting rights when it comes to select the company’s board of director or the business decisions to be made.
Preferred Stock: Preferred stocks are sometime referred to as hybrid securities, because it contains elements of both debit security and equity security. Preferred stock confers ownership rights to security holder that is why it is equity instrument
<a href="https://www.writofinance.com/equity-securities-features-types-risk/" >Equity securities </a> as a whole is used for capital funding for companies. Companies have multiple expenses to cover. Potential growth of company is required in competitive market. So, these securities are used for capital generation, and then uses it for company’s growth.
Concluding remarks
Both are employed in business. Businesses are often established through debit securities, then what is the need for equity securities. Companies have to cover multiple expenses and expansion of business. They can also use equity instruments for repayment of debits. So, there are multiple uses for securities. As an investor, you need tools for analysis. Investment decisions are made by carefully analyzing the market. For better analysis of the stock market, investors often employ financial analysis of companies.
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
Exploring Abhay Bhutada’s Views After Poonawalla Fincorp’s Collaboration With...beulahfernandes8
The financial landscape in India has witnessed a significant development with the recent collaboration between Poonawalla Fincorp and IndusInd Bank.
The launch of the co-branded credit card, the IndusInd Bank Poonawalla Fincorp eLITE RuPay Platinum Credit Card, marks a major milestone for both entities.
This strategic move aims to redefine and elevate the banking experience for customers.
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
The new type of smart, sustainable entrepreneurship and the next day | Europe...
Financial Institutions and Economic Development
1. THE GROWTH OF THE FINANCIAL SECTOR HAS A POSITIVE IMPACT ON THE ECONOMIC
DEVELOPMENT OF A COUNTRY.
FINANCIAL
INSTITUTIONS
PRESENTER: P. MABAMBA-2019 1
2. DEFITION OF TERMS
• Jurek (2014) defines financial institutions (FIs) as those firms engaged in the business of dealing
with financial and monetary transactions such as deposits, loans, investments and currency
exchange.
• The financial sector is a section of the economy made up of firms and institutions that provide
financial services to commercial and retail customers. This sector comprises a broad range of
industries including banks, investment companies, insurance companies, and real estate firms
(Aizenman, Pinto & Sushko, 2013).
• Economic development is the process by which a nation improves the economic, political, and
social well-being of its people.
PRESENTER: P. MABAMBA-2019 2
3. DEFINITION OF TEMS (CONT..)
• Whereas economic development is a policy intervention endeavor with aims of improving the
economic and social well-being of people, economic growth is a phenomenon of market
productivity and rise in GDP.
• Consequently, as economist Amartya Sen points out, "economic growth is one aspect of the
process of economic development“
• Indicators of economic development: BNP per capita; Population Growth; Occupational Structure
of the Labor Force; Urbanization.; Consumption per capita; Infrastructure; Social Conditions;
literacy rate; life expectancy; health care; caloric intake; infant mortality etc
PRESENTER: P. MABAMBA-2019 3
4. FINANCIAL SECTOR & ECONOMIC
DEVELOPMENT
• Development of insurance and banking institutions is one of the crucial elements that plays an
important role in stimulating financial development and thereby the growth of the economy (e.g.,
Patrick 1966, Sandberg, 1978; Levine, 1997).
• Asserting the importance of financial intermediaries, Schumpeter (1911) argued that the services
provided by them are crucial for economic development.
• Analyzing the same relationship for 10 developing countries Christopoulos and Tsionas (2004),
find causal relationship from financial development to economic growth in the long run.
• A strong financial sector includes banks, investment companies, insurance companies, and real
estate firms, and these are central in promoting economic growth through provision of resources
for industrial exapansion.
PRESENTER: P. MABAMBA-2019 4
5. FINANCIAL SECTOR & ECONOMIC
DEVELOPMENT
• Researchers have suggested that the relationship between financial development and economic
growth depends on the level of economic development in the country.
• For example, Liang and Reichert (2006) find that the causality between financial development and
economic growth changes with the change in economic growth cycle.
• At some level it is “demand following” while at some other level it is “supply led.”
• For the developing countries the causality shows “demand following” relationship while such results
for the developed countries were found to be weak.
PRESENTER: P. MABAMBA-2019 5
6. FINANCIAL SECTOR & ECONOMIC
DEVELOPMENT
• he empirical study by Arena (2008) finds that economic growth is positively and significantly affected
by insurance activity.
• The findings show that life insurance has a significant effect on economic growth only on high
income countries.
• Haiss and Sumegi (2008) also find positive impact of life insurance on economic growth of
European Region countries that include Switzerland, Norway and Iceland.
• Similar results are also found by Curak et al. (2009) where using the data of 10 transition EU
countries, they have found that economic growth is promoted by development in the insurance
sector
PRESENTER: P. MABAMBA-2019 6
7. FINANCIAL SECTOR & ECONOMIC
DEVELOPMENT
• The impact of financial sector in economic growth is considered vital for the economies as the
financial sector or intermediaries play an important role in mobilizing the funds “to the highest-
valued users in the economy” (Greenwood, 2013).
• According to Levin (2004) in Zhuang et.al., (2009) the countries with well developed financial
sector services tend to grow faster as they can invest more and thus reap more.
• a financial system that is well-developed stimulates growth by channeling savings to the most
productive investment projects.
• Conversely, financial repression results in poorly functioning financial system that in turn
depresses growth.
PRESENTER: P. MABAMBA-2019 7
8. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• The promotion of development needs a sufficient amount of capital stock and profitable investment
that guarantees a sustainable growth in the economy – thus, growth in the financial sector is a
prerequisite of economic development.
• A stable financial sector enables savings, and the necessity of savings for economic growth is linked
with their effectiveness in financing capital accumulation and therefore increasing investments
(Pagano, 1993).
• Ideally, the banking sector develops to serve as an efficient intermediary between depositors and
investors, generating market-clearing prices and interests rates, and these are indispensable in
economic growth through revenue accumulation.
• According to Bencivenga and Smith (1991) the beneficial activities of banks are accepting deposits,
lending thus eliminating the need for self financing.
PRESENTER: P. MABAMBA-2019 8
9. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• Banking sector development can also be measured by the margin between lending and deposit
interest rates and by the percentage of non-performing loans in the economy.
• This is because both are significantly and negatively related to economic growth as non-performing
loans describe the quantity and quality of information that the banking sector has collected and
analyzed which in turn affects its lending to investors.
• The World Bank (2001) cited empirical studies, which strongly suggested that improvements in
financial arrangements precede and contribute to economic performance.
PRESENTER: P. MABAMBA-2019 9
10. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• The financial system is also particularly important in reallocating capital and thus providing the
basis for the continuous restructuring of the economy that is needed to support growth.
• Looking back more than one century ago, during the Industrial Revolution, it’s observable that
England's financial sector did a better job in identifying and funding profitable ventures than other
countries in the mid-1800s. This helped England enjoy comparatively greater economic success.
• he banker and former editor of “The Economist” Walter Bagehot expressed this in 1873 as follows.
‘In England, however, ... capital runs as surely and instantly where it is most wanted, and where
there is most to be made of it, as water runs to find its level.”
PRESENTER: P. MABAMBA-2019 10
11. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• Bank-based finance has a special role to play for many companies in need of funds, and thus helps
to ensure a well-balanced growth process.
• Banks can contribute to alleviating the impact of sudden economic shocks on their clients.
• Banks stand ready to provide many customers with funds even in adverse circumstances, e.g.
when the liquidity of financial markets dries up.
• However, if the financial sector is not developed enough, lending becomes compromised hence
increases the risk of financial shocks on many firms. Thus disrupting the positive developmental
trajectory of a country.
PRESENTER: P. MABAMBA-2019 11
12. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• Also the design of prudential regulation plays an important role from a growth perspective.
• Supervision is the guardian of financial stability, which in turn crucially determines the capability of
the financial system to allocate resources efficiently and absorb liquidity shocks.
• The collapse of the Zimbabwean financial sector in 2008 led to a failed economy as all forms of
trade came to a standstill.
• Also, a weak financial sector in Zimbabwe led to the “disappearance” of 15 billion. Such porous
and leaking financial sectors are a liability to the economic development of a country.
PRESENTER: P. MABAMBA-2019 12
13. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• A developed financial sector allows money exchange which leads to accumulation of foreign
currency through remittance inflows and these contribute immensely to economic development.
• Remittances made up between 11-15% of Zimbabwe’s GDP in 2011. such figure as R6.8 Billion
(about US$847 million) is a significant input into the economy.
• Remittance inflows started to increase around 2008 when the financial sector made significant
improvements which Mukuru, Ecocash Diaspora, and World Remit coming into play.
PRESENTER: P. MABAMBA-2019 13
14. THE ROLE OF THE FIANCIAL SECTOR IN
ECONOMIC GROWTH
• Financial sector development may be an essential prerequisite for economic growth, since well-
functioning markets and financial institutions may reduce the transaction costs and asymmetric
information problems.
• At the same time, financial institutions play an increasingly pivotal role in identifying investment
opportunities, selecting the most profitable projects, mobilizing savings, facilitating trading and the
diversification of risk, as well as improving corporate governance mechanisms.
• An efficient financial sector positively affect economic growth through the efficient allocation of
resources to the most productive users.
PRESENTER: P. MABAMBA-2019 14
16. DEPENDENCIES
• A strong financial sector alone is not sufficient to drive economic growth.
• Strong institutions and effective investment policies are equally indispensable in driving
economic growth.
• Borrowing constraints and growth will ultimately depend on the importance of the effect of
borrowing constraints on the marginal productivity of capital relative to their effect on the
volume of savings.
• It could be argued that the roles of banks in economic growth of countries are limited especially
in developing economies where imperfect information exists.
PRESENTER: P. MABAMBA-2019 16
17. DEPENDENCIES
• It could be argued that the roles of banks in economic growth of countries are limited especially in
developing economies where imperfect information exists.
• The paradigm of asymmetric information between borrowers and lenders offers valuable insights
into the forms that finance is likely to take; as it will determine who will be able to obtain finance,
from whom and under what terms and conditions.
• This process will severely limit access to funds for those who need it and thus slow the rate of
economic activities.
• Thus, banks engage in credit rationing to compensate for this risk by imposing higher prices on
borrowers which discourages borrowers with worthwhile investments from seeking loans, thereby
worsens the rate economic activities in the country.
PRESENTER: P. MABAMBA-2019 17
18. DEPENDENCIES
• In effect the role of banks in economic growth is severely limited as credit rationing
discourages a pool of borrowers which undermines the markets.
PRESENTER: P. MABAMBA-2019 18
19. CONCLUSION
• To come to a general empirical conclusion, we can say that studies using cross sectional
regressions found out that financial developments positively affect economic growth
through productivity of capital and accumulation of saving, though they however failed in
explaining the real direction of causality between financial development and economic
growth.
PRESENTER: P. MABAMBA-2019 19