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"Policymakers and economists disagree about the impact of bank regulations on the distribution of income. Exploiting cross-state and cross-time variation, we test whether liberalizing restrictions on intra-state branching in the United States intensified, ameliorated, or had no effect on income distribution. We find that branch deregulation lowered income inequality. Deregulation lowered income inequality by affecting labor market conditions, not by boosting the business income of the poor, nor by enhancing educational attainment. Reductions in the earnings gap between men and women and between skilled and unskilled workers account for the bulk of the explained drop in income inequality"--National Bureau of Economic Research web site.
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This paper examines the evolving importance of banks and securities markets during the process of economic development. As economies develop, they increase their demand for the services provided by securities markets relative to those provided by banks, such that securities markets become increasingly important for future economic development. Some exploratory evidence further suggests that deviations of a country's actual financial structure-the mixture of banks and markets operating in an economy-from the estimated optimal structure are associated with lower levels of economic activity.
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This paper critically reviews the literature on finance and inequality, highlighting substantive gaps in the literature. Finance plays a crucial role in most theories of persistent inequality. Unsurprisingly, therefore, economic theory provides a rich set of predictions concerning both the impact of finance on inequality and about the relevant mechanisms. Although subject to ample qualifications, the bulk of empirical research suggests that improvements in financial contracts, markets, and intermediaries expand economic opportunities and reduce inequality. Yet, there is a shortage of theoretical and empirical research on the potentially enormous impact of formal financial sector policies, such as bank regulations and securities law, on persistent inequality. Furthermore, there is no conceptual framework for considering the joint and endogenous evolution of finance, inequality, and economic growth.
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We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the "text messaging capital of the world". We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer's name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.
Firm Behavior: Theory --- Intertemporal Firm Choice, Investment, Capacity, and Financing --- Banks • Depository Institutions • Micro Finance Institutions • Mortgages --- Financial Markets • Saving and Capital Investment • Corporate Finance and Governance --- Formal and Informal Sectors • Shadow Economy • Institutional Arrangements
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In recent years, the number of countries which have borrowed in international capital markets by issuing sovereign bonds has increased substantially. For these countries, capital market access meant a de facto acknowledgement of their policy successes and improvements in their creditworthiness that enabled them to graduate from the group of official financing recipients into a more advanced group of emerging market economies. The paper looks at the determinants of sovereign bond issuances and derives the relationship between internal and external factors and market access using a simple macro model. The market access condition is then translated into a simple rule that requires an excess demand for the sovereign bonds in question. Regression results based on this model offer some insights into peculiarities of first-time sovereign bond issues that could be used in policy deliberations.
Finance: General --- Investments: Bonds --- International Lending and Debt Problems --- International Financial Markets --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- General Financial Markets: General (includes Measurement and Data) --- Investment & securities --- Finance --- Sovereign bonds --- Bonds --- Emerging and frontier financial markets --- Securities markets --- International capital markets --- Financial institutions --- Financial markets --- Capital market --- Financial services industry --- United States
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Many governments and nongovernmental organizations have adopted policies to promote the growth of microfinance institutions (MFIs). The appropriate level and form of support for MFIs are discussed in this paper on the basis of a review of key MFI characteristics. Governments are also responsible for the regulation of MFIs; here, some principles concerning the extent and coverage of MFI regulation and supervision are developed.
Banks and Banking --- Financial Risk Management --- Industries: Financial Services --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Financial Institutions and Services: Government Policy and Regulation --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Finance --- Banking --- Economic & financial crises & disasters --- Loans --- Financial services --- Commercial banks --- Microfinance --- Deposit insurance --- Financial institutions --- Financial crises --- Financial services industry --- Banks and banking --- Crisis management --- Indonesia
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Central banks often buy or sell reserves-–-so called FX interventions (FXIs)---to dampen sharp exchange rate movements caused by volatile capital flows. At the same time, these interventions may entail unintended side effects. In this paper, we investigate whether FXIs incentivize firms to take on more unhedged FX debt, thereby increasing medium-term corporate vulnerabilities. Using a novel dataset with close to 5,000 nonfinancial firms across 19 emerging markets covering 2002--2017, we find that the firm-level share of FX debt rises following intensive use of FXIs, particularly for non-exporting firms in shallow financial markets with no FX debt to begin with. The magnitude of this effect is economically significant, with one standard deviation increase in FXI leading to an average 2 percentage points increase in the FX debt share. For reference, the median share of FX debt in the sample is zero.
Foreign Exchange --- Money and Monetary Policy --- International Lending and Debt Problems --- Portfolio Choice --- Investment Decisions --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Exchange rate arrangements --- Exchange rates --- Currencies --- Exchange rate flexibility --- Money --- United States
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Central banks often buy or sell reserves-–-so called FX interventions (FXIs)---to dampen sharp exchange rate movements caused by volatile capital flows. At the same time, these interventions may entail unintended side effects. In this paper, we investigate whether FXIs incentivize firms to take on more unhedged FX debt, thereby increasing medium-term corporate vulnerabilities. Using a novel dataset with close to 5,000 nonfinancial firms across 19 emerging markets covering 2002--2017, we find that the firm-level share of FX debt rises following intensive use of FXIs, particularly for non-exporting firms in shallow financial markets with no FX debt to begin with. The magnitude of this effect is economically significant, with one standard deviation increase in FXI leading to an average 2 percentage points increase in the FX debt share. For reference, the median share of FX debt in the sample is zero.
United States --- Foreign Exchange --- Money and Monetary Policy --- International Lending and Debt Problems --- Portfolio Choice --- Investment Decisions --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Exchange rate arrangements --- Exchange rates --- Currencies --- Exchange rate flexibility --- Money
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China’s exchange rate regime has undergone gradual reform since the move away from a fixed exchange rate in 2005. The renminbi has become more flexible over time but is still carefully managed, and depth and liquidity in the onshore FX market is relatively low compared to other countries with de jure floating currencies. Allowing a greater role for market forces within the existing regime, and greater two-way flexibility of the exchange rate, are important steps to build on the progress already made. This should be complemented by further steps to develop the FX market, improve FX risk management, and modernize the monetary policy framework.
International Monetary Fund --- Internationaal monetair fonds --- International monetary fund --- Evaluation. --- Foreign Exchange --- Money and Monetary Policy --- International Monetary Arrangements and Institutions --- International Financial Markets --- Economic Development: Financial Markets --- Saving and Capital Investment --- Corporate Finance and Governance --- Economic History: Financial Markets and Institutions: General, International, or Comparative --- Monetary Systems --- Standards --- Regimes --- Government and the Monetary System --- Payment Systems --- Currency --- Foreign exchange --- Monetary economics --- Exchange rates --- Exchange rate flexibility --- Exchange rate arrangements --- Currencies --- Money --- China, People's Republic of
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