Talk:Financial sector development

Dr. Cecchetti's comment on this article

Dr. Cecchetti has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

1) I would work on the introduction, recasting it as following:

I would use the term "financial system" rather than "financial sector." The financial system is composed of financial instruments, financial markets, financial institutions, regulatory agencies and central banks. Each of these has a function. I would then describe each of these.

Recent work on the relationship between the financial deepening or the size of the financial sector has gone beyond the analysis of emerging market countries and looked at the consequences of the size of the financial sector on growth in advanced economies. Here the results are less optimistic. Given this, my recommendation is to broaden the entry beyond the impact on EMEs. This would then include citations to more recent empirical work.

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Dr. Cecchetti has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Stephen Cecchetti & Enisse Kharroubi, 2012. "Reassessing the impact of finance on growth," BIS Working Papers 381, Bank for International Settlements.

ExpertIdeas (talk) 02:20, 29 August 2015 (UTC)

Dr. Asongu's comment on this article

Dr. Asongu has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

1) Section on “Importance of Financial Sector Development”

I suggest balancing the narrative on meta-analysis which reads ‘A meta-analysis of 67 empirical studies finds that financial development is robustly associated with economic growth’.

Asongu (2015) has also conducted a meta-analysis on 196 outcomes to conclude that the positive finance-growth nexus is substantially driven by publication bias. “The findings also show evidence of publication bias. Overall, a genuine effect exists between financial development and economic growth. A finance-growth nexus might not be appealing in our era because of: endogeneity-based estimations, publication bias, and effects of financial activity. A historical justification has also been discussed. Encouraging the publication of results with findings that are not consistent with the mainstream positive finance-growth nexus should provide new scholarly insights into the relationship. Depending on the specific context of sampled countries, the role of policy has also been to encourage financial development through measures that may expose countries to negative external shocks like financial crises. Policy makers that have been viewing the challenges of development exclusively from this point of view for the rewards of growth may not be getting the financial dynamics correctly” (p.615).

Asongu, S. A, (2015). “Finance and growth: new evidence from meta-analysis”, Managerial Finance, 41(6), pp. 615-639. http://www.emeraldinsight.com/doi/abs/10.1108/MF-09-2013-0249

2)Section on “Theories of Financial Sector Development” The law-finance theory by La Porta Rafael, Florencio Lopez-de-Silanes, Andrei Shleifer, and Robert W Vishny (hence LLSV), is omitted.

According to Asongu (2012a, p.386), there is a “ growing body of work which suggests that cross-country differences in legal origin explain cross-country differences in financial development and growth. LLSV (1998) pioneered this strand and many authors have since taken from them in the assertion that English common law countries have better prospects for financial development than their French civil law counterparts. They posit that countries with common law traditions (French civil law traditions) furnish the strongest (weakest) legal protection to shareholders and creditors (LLSV, 1998, 2000). The edge of English legal origin over the Frenchcolonial legacy has been generalized and extended to many other dimensions of management and government: more informative accounting standards (LLSV,1998), better institutions with less corrupt governments (LLSV, 1999) and more efficient courts (Djankov et al., 2003)”.

The underlying literature as based on ‘if legal origins matter’ in financial development. Beck et al. (2003) has developed a theory of ‘why legal origins matter’ using political and adaptability channels.

“Beck et al. (2003) have shed some light on the concern of why legal origin matter in finance by empirically assessing two channel-based theories. The political channel lays emphasis on how legal traditions differ in the priority they attribute to the rights of individual investors vis-à-vis the State. It follows that championing investors’ rights should have a greater bearing on financial development. The adaptability channel postulates that legal traditions differ in their capacity to adapt to changing business circumstances. This implies that countries in which legal systems provide for adjustments with respect to changing and evolving circumstances are rewarded with a higher propensity to financial development” (Asongu, 2012a, p. 386).

Whereas law finance theory has been empirically confirmed (Asongu, 2012b) and rejected (Fowowe, 2013) in Africa, it is very apparent that African countries with English common law traditions have more developed financial markets compared to their counterparts with French civil law traditions (Asongu, 2013).

Given that the law and finance theory fundamentally depend on English law’s emphasis on property rights, some doubts have been documented on theory

According to Asongu (2015) “Some doubts have been documented about the law and property rights theory, which suggest that British Common law supports innovation development to a greater extent than Civil law systems. The legal origins theory from which the underlying theory is derived suggests that Common law systems (strong property rights, the role of the judiciary, etc.) promote innovation better than Civil law systems. Four points are important to retain here. (1) Some scholars doubt whether the distinction between Common law and Civil law can be justified from an historical perspective (Deakin and Siems 2010, p. 10). (2) Today, with internationalization, modern trends make the Common law/Civil law distinction even less persuasive. (3) It is not clear why in substance we may expect differences in Common law and Civil law systems on the pure assumption that Common law tradition is characterized by independent judges and juries (relatively weaker reliance on statutes and the preference for contracts and private litigation as a means of dealing with social harms), whereas Civil law tradition is characterized by state-employed judges, great reliance on legal and procedural codes, and a preference for state regulation over private regulation. (4) The classification of countries into Common law and Civil law countries disregards: the ongoing influence of their pre-transplant law; the mixture and modification at the moment when some copying of foreign law occurs; and the post-transplant period (in which the transplanted law may be altered or applied differently from the origin country)” (Asongu, 2015, p. 698).

References

Asongu, S. A., (2012a). “Law and finance in Africa”, Brussels Economic Review, 54(4), pp. 385-408. https://ideas.repec.org/a/bxr/bxrceb/2013-156283.html

Asongu, S. A., (2012b). “Government Quality Determinants of Stock Market Performance in African Countries”, Journal of African Business, 13(3), pp. 183-199. http://www.tandfonline.com/doi/abs/10.1080/15228916.2012.727744?journalCode=wjab20

Asongu, S. A., (2013). “African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment”, Journal of African Business, 14(3), pp. 186-201. http://www.tandfonline.com/doi/abs/10.1080/15228916.2013.844043

Asongu, S. A., (2015). “Fighting Software Piracy in Africa: How Do Legal Origins and IPRs Protection Channels Matter?”, Journal of the Knowledge Economy, 6(4), pp. 682-703. http://link.springer.com/article/10.1007/s13132-012-0137-0

Beck, T., Demirgüç-Kunt, A., & Levine, R., (2003), “Law and finance: why does legal origin matter?”, Journal of Comparative Economics, 31(4), pp. 653-675. http://www.sciencedirect.com/science/article/pii/S0147596703000982

Deakin, S., & Siems, M. (2010). “Comparative law and finance: Past, present and future research”, Journal of Institutional and Theoretical Economics, 166(1), pp.120-140. http://www.ingentaconnect.com/content/mohr/jite/2010/00000166/00000001/art00014

Djankov, S., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A., (2003), “Courts”, Quarterly Journal of Economics, 118(2), pp.453-517. http://www.jstor.org/stable/25053912?seq=1#page_scan_tab_contents

Fowowe, B., (2013). “Law and Finance Revisited: Evidence from African Countries”, South African Journal of Economics, 82(2), pp. 193-208. http://onlinelibrary.wiley.com/doi/10.1111/saje.12020/abstract

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R.W., (1998), “Law and finance”, Journal of Political Economy, 106(6), pp. 1113-1155. http://www.nber.org/papers/w5661

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R.W., (1999), “The quality of government”, Journal of Law, Economics and Organization, 15(1), pp.222-279. http://jleo.oxfordjournals.org/content/15/1/222.short

La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R.W., (2000), “ Investor protection and corporate governance”, Journal of Financial Economics, 58(1-2), pp.141-186.

http://www.sciencedirect.com/science/article/pii/S0304405X00000659

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Dr. Asongu has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Asongu, Simplice A, 2014. "Knowledge Economy and Financial Sector Competition in African Countries," MPRA Paper 57385, University Library of Munich, Germany.

ExpertIdeasBot (talk) 22:40, 28 May 2016 (UTC)

Dr. Gomes's comment on this article

Dr. Gomes has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article offers a succinct and clear discussion on financial sector development (FSD) as a tool for fostering economic activity in developing countries. The main relevant aspects are covered: the importance of FSD, the theories of FSD and the role of the World Bank in stimulating FSD.

In the second line of the text, when stating ‘The financial sector is the set of institutions, instruments and markets.’, the respective institutions, instruments and markets should be enumerated or at least exemplified. References are not complete; they should be conveniently edited (namely those relating Levine et al.; Demigurç-Kuhn and Levine; and Rajan and Zingales).

The article would gain with a new section relating financial development and financialization (Sawyer, M. (2013). “What Is Financialization?” International Journal of Political Economy, vol. 42(4), pp. 5-18; Sawyer, M. (2014). Financial Development, Financialisation and Economic Growth. FESSUD Working Paper Series, N.º 21. Leeds: University of Leeds).

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Dr. Gomes has published scholarly research which seems to be relevant to this Wikipedia article:

• Reference : Gomes, Orlando, 2007. "Constraints on credit, consumer behaviour and the dynamics of wealth," MPRA Paper 2886, University Library of Munich, Germany.

ExpertIdeasBot (talk) 12:42, 7 June 2016 (UTC)

Dr. Destefanis's comment on this article

Dr. Destefanis has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

I think the article is ok. It could use some more references to local economic development: see e.g. work and references in http://www.tandfonline.com/doi/abs/10.1080/09603107.2014.941529#.V5zK4a7XClg.

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We believe Dr. Destefanis has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Cristian Barra & Sergio Destefanis & Giuseppe Lubrano Lavadera, 2013. "Financial Development and Economic Growth: Evidence from Highly Disaggregated Italian Data," CSEF Working Papers 346, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

ExpertIdeasBot (talk) 16:37, 2 August 2016 (UTC)

Dr. Demetriades's comment on this article

Dr. Demetriades has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

The article is not very balanced and it is rather under-developed, it also fails to take into account recent studies that show that the relationship between finance and growth has become extinct in recent data (e.g. Rousseau and Wachtel, Ecn Inq. 2011), or even reversed.

It fails to take on board early studies that challenged the direction of causality between finance and growth e.g. Demetriades and Hussein, Journal of Development Economics 1996. Not sure why Malaysia deserves a mention.

The payments system gets only a brief mention, yet when that freezes, the economy paralyses, no transactions can take place.

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We believe Dr. Demetriades has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Badi H. Baltagi & Panicos O. Demetriades & Siong Hook Law, 2008. "Financial Development and Openness: Evidence from Panel Data," Center for Policy Research Working Papers 107, Center for Policy Research, Maxwell School, Syracuse University.

ExpertIdeasBot (talk) 02:36, 6 September 2016 (UTC)

Dr. von Hagen's comment on this article

Dr. von Hagen has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

Financial development refers not only to developing countries but to all countries. The initial research in this area looked at differences in financial development among developed countries and found them to be important in terms of economic welfare.

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We believe Dr. von Hagen has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Juergen von Hagen & Haiping zhang, 2010. "International Capital Flows and Aggregate Output," Working Papers 10-2010, Singapore Management University, School of Economics.

ExpertIdeasBot (talk) 02:06, 2 October 2016 (UTC)

Dr. Schmukler's comment on this article

Dr. Schmukler has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

- This is not specific to developing countries. It is important to developed countries as well.

- It should cover issues of access to finance.

- I would mention issues of financial stability, and how more finance might be related to more volatility and crises at time.

- Perhaps you could use all the editions of the Global Financial Development Report by the World Bank. There are three already published, and one more is under production.

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Schmukler has expertise on the topic of this article, since he has published relevant scholarly research:

• Reference : Didier, Tatiana & Rigobon, Roberto & Schmukler, Sergio L., 2011. "Unexploited gains from international diversification : patterns of portfolio holdings around the world," Policy Research Working Paper Series 5524, The World Bank.

ExpertIdeasBot (talk) 11:13, 22 December 2016 (UTC)

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