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This study aims to identify policies that influence the development of financial institutions as measured across three dimensions: depth, efficiency, and stability. Applying the concept of the financial possibility frontier, developed by Beck & Feyen (2013) and formalized by Barajas et al (2013a), we determine key policy variables affecting the gap between actual levels of development and benchmarks predicted by structural variables. Our dynamic panel estimation shows that inflation, trade openness, institutional quality, and banking crises significantly affect financial development. Our analysis also helps identify potential complementarities and trade-offs for policy makers, based on the effect of the policy variables across the different dimensions of financial development.

Banks and Banking --- Econometrics --- Finance: General --- Demography --- Financial Markets and the Macroeconomy --- Monetary Policy --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Estimation --- Financial Crises --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Demographic Economics: General --- Econometrics & economic statistics --- Finance --- Economic & financial crises & disasters --- Banking --- Population & demography --- Estimation techniques --- Financial sector development --- Banking crises --- Commercial banks --- Population and demographics --- Econometric analysis --- Financial markets --- Financial crises --- Financial institutions --- Econometric models --- Financial services industry --- Banks and banking --- Population --- United States

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We examine the role of household financial access in determining the extent of risksharing in Nigeria using household-level panel data. We estimate changes in the response of consumption to shocks for households with formal and informal access to finance and those without, both for the country as a whole and for different regions. Our findings suggest that households with financial access who experience an unexpected negative income shock see consumption fall by 15 percentage points less than those without access. This result is mainly driven by households with informal financial access, and by household savings rather than borrowing. Regional variation in risk sharing tends to be significant, suggesting that financial inclusion efforts going forward should have a more regional focus.

Consumption (Economics) --- Financial services industry --- Services, Financial --- Service industries --- Consumer demand --- Consumer spending --- Consumerism --- Spending, Consumer --- Demand (Economic theory) --- Banks and Banking --- Macroeconomics --- Finance: General --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Formal and Informal Sectors --- Shadow Economy --- Institutional Arrangements --- Economywide Country Studies: Africa --- Macroeconomics: Consumption --- Saving --- Wealth --- Urban, Rural, and Regional Economics: Household Analysis: General --- Aggregate Factor Income Distribution --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Markets and the Macroeconomy --- Banking --- Finance --- Consumption --- Household consumption --- Income shocks --- Income --- National accounts --- Financial inclusion --- Financial markets --- Economics --- Banks and banking --- Nigeria

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The paper analyses existing country-level information on the relationship between the development of Islamic banking and financial inclusion. In Muslim countries—members of the Organization for Islamic Cooperation (OIC)—various indicators of financial inclusion tend to be lower, and the share of excluded individuals citing religious reasons for not using bank accounts is noticeably greater than in other countries; Islamic banking would therefore seem to be an effective avenue for financial inclusion. We found, however, that although physical access to financial services has grown more rapidly in the OIC countries, the use of these services has not increased as quickly. Moreover, regression analyis shows evidence of a positive link to credit to households and to firms for financing investment, but this empirical link remains tentative and relatively weak. The paper explores reasons that this might be the case and suggests several recommendations to enhance the ability of Islamic banking to promote financial inclusion.

Banks and banking --- Banks and banking, Islamic --- Islamic banks and banking --- Non-interest banks, Islamic --- Religious aspects --- Islam. --- Banks and Banking --- Finance: General --- Money and Monetary Policy --- Industries: Financial Services --- Islamic Banking and Finance --- Financial Markets and the Macroeconomy --- Monetary Policy --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Other Economic Systems: Public Economics --- Financial Economics --- Financial Institutions and Services: Government Policy and Regulation --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Monetary Policy, Central Banking, and the Supply of Money and Credit: General --- Banking --- Finance --- Monetary economics --- Islamic banking --- Financial inclusion --- Financial services --- Credit --- Financial markets --- Money --- Commercial banks --- Financial institutions --- Islamic countries --- Financial services industry --- Saudi Arabia

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The SDN discusses the main policy issues and challenges in building an inclusive and safe Islamic finance industry, with emphasis on Islamic banking and Sukuk markets. To this end, it discuses why Islamic finance matters, taking into account its recent and prospective growth; and, its potential contributions in terms of financial inclusion, support for small- and medium-sized enterprises and investment in public infrastructure and, in principle, reduced systemic risk. It then covers a range of regulatory and other challenges, and offers policy advice, to address factors that hamper the development of the industry and, more generally, the delivery of its potential benefits. The paper covers regulatory and supervisory issues, safety nets and resolution frameworks, access to finance, Sukuk markets, and macroeconomic policies.

Islam --- Banks and banking --- Deposit insurance --- Financial risk management --- Crisis management --- Monetary policy --- Liquidity (Economics) --- Fiscal policy --- Finance --- Funding --- Funds --- Economics --- Currency question --- Tax policy --- Taxation --- Economic policy --- Finance, Public --- Assets, Frozen --- Frozen assets --- Monetary management --- Currency boards --- Money supply --- Crises --- Management of crises --- Management --- Problem solving --- Conflict management --- Risk management --- Bank deposit insurance --- Insurance, Deposit --- Savings insurance --- Insurance --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Financial institutions --- Money --- Mohammedanism --- Muhammadanism --- Muslimism --- Mussulmanism --- Religions --- Muslims --- Religious aspects&delete& --- Islam&delete& --- State supervision --- Government policy --- Government guaranty of deposits --- InfraStructure --- Infra Structure --- Finance. --- E-books --- Religious aspects --- Banks and banking, Islamic --- Islamic banks and banking --- Non-interest banks, Islamic --- Banks and Banking --- Financial Risk Management --- Industries: Financial Services --- Islamic Banking and Finance --- Financial Markets and the Macroeconomy --- Monetary Policy --- General Financial Markets: Government Policy and Regulation --- Taxation and Subsidies: Other --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Other Economic Systems: Public Economics --- Financial Economics --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Economic & financial crises & disasters --- Financial services law & regulation --- Islamic finance --- Islamic banking --- Financial services --- Financial crises --- Islamic banking supervision --- Financial regulation and supervision --- Islamic countries --- Financial services industry --- Malaysia

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Since we introduced the term "middle-income trap" in 2006, it has become popular among policy makers and researchers. In May 2015, a search of Google Scholar returned more than 3,000 articles including the term and about 300 articles with the term in the title. This paper provides a (non-exhaustive) survey of this literature. The paper then discusses what, in retrospect, we missed when we coined the term. Today, based on developments in East Asia, Latin America, and Central Europe during the past decade, we would have paid more attention to demographic factors, entrepreneurship, and external institutional anchors. We would also make it clearer that to us, the term was as much the absence of a satisfactory theory that could inform development policy in middle-income economies as the articulation of a development phenomenon. Three-quarters of the people in the world now live in middle-income economies, but economists have yet to provide a reliable theory of growth to help policy makers navigate the transition from middle- to high-income status. Hybrids of the Solow-Swan and Lucas-Romer models are not unhelpful, but they are poor substitutes for a well-constructed growth framework.

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