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Business and Economics > Finance: General

You are looking at 1 - 9 of 9 items for :

  • Type: Journal Issue x
  • Economic Development, Innovation, Technological Change, and Growth x
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Cover IMF Working Papers
Mobile Money, Perception about Cash, and Financial Inclusion: Learning from Uganda’s Micro-Level Data
Felix F. Simione
and
Tara S Muehlschlegel
Will mobile money render cash less dominant over time in Africa? Can it promote financial inclusion? We shed light on these questions by exploring individual-level and nationally representative survey data for Uganda, a country in a region that pioneered mobile money in the world. We use the Propensity Score Matching method to robustly compare mobile money users and non-users across a range of indicators that capture individuals’ perceptions about cash, and the extent to which they remit, save, and borrow money. We present the first evidence that mobile money users, compared to non-users, are more likely to perceive cash as risky and less likely to prefer carrying large amounts of cash. We also confirm that mobile money users are more likely to receive and send remittances, save, and borrow. They also save and borrow larger amounts.
Keywords:
Developing Country; Innovation; Digital Divide; money usage; selected indicator; Propensity Score Matching method; usage treatment; deposit balance; Mobile banking; Remittances; Financial inclusion; Digital financial services; Consumer credit; Africa; Sub-Saharan Africa
Cover IMF Working Papers
Estimation and Determinants of Cost Efficiency: Evidence from Central Bank Operational Expenses
Mr. Romain M Veyrune
and
Solo Zerbo
The finances of central banks is a topic of renewed interest: many central banks are posting significant losses due to the cost of monetary policy, over which central banks have no control. Conversely, operational expenses, over which the central banks have more control, is a subject of less attention. We use public income statement data from central banks to calculate a score for operational expense efficiency based on a stochastic frontier analysis. In addition, we offer potential explanations for the observed variations in efficiency levels across central banks. Our analysis reveals significant heterogeneity across countries and income groups. Central banks with a single objective demonstrate higher efficiency compared with those with multiple objectives. Regarding the output of price stability, central banks in low-income developing countries exhibit lower efficiency compared with central banks in emerging markets and advanced economies. Factors such as central bank independence, the depth of the financial system, and the degree of openness play a role in influencing efficiency levels. Our findings underscore the significance of well-defined objectives, the operating environment, and concentration on core activities in reducing inefficiency.
Keywords:
operational efficiency; stochastic frontier analysis; operating independence; trade; financial depth; efficiency level; central bank efficiency; cost efficiency; efficiency estimate; operation function; Central bank mandate; Central bank autonomy; Price stabilization; Income; Emerging and frontier financial markets
Cover IMF Working Papers
IMF’s Precautionary Lending Instruments: Have They Worked?
Giulio Lisi
The paper documents the benefits provided by IMF’s precautionary instruments (FCL and PLL) to countries in accessing international financial markets. It builds on multiple methods to show that the announcement of new FCL or PLL generally leads to a significant decline in sovereign spreads. Next, it evaluates the role of the FCL and PLL in mitigating external financial pressures, focusing on the COVID-19 pandemic as a case study. Economies which had a PLL or FCL arrangement in place during the pandemic experienced a lower increase in spreads relative to other emerging markets, even after controlling for country-specific effects and other covariates, suggesting that these arrangements help cushion external shocks. Finally, the study asks whether FCL/PLL drawdowns have an impact on financial perceptions; the analysis finds—albeit on the basis of a very small sample— no evidence of downside effects from countries drawing down on these arrangements .
Keywords:
IMF; Precautionary instruments; Event studies; Synthetic control.; PLL drawdown; precautionary lending instrument; fcl arrangement; precautionary instrument; PLL adopter; COVID-19; Emerging and frontier financial markets; Oil prices; Credit default swap; Sovereign bonds; Global
Cover Good Governance in Sub-Saharan Africa
Good Governance in Sub-Saharan Africa
Opportunities and Lessons

Abstract

Governance and corruption issues have taken the center stage in international discussions, especially after the adoption by the IMF in 2018 of a new framework for engagement on governance and corruption. Sound institutions that guarantee integrity in the management of public affairs are critical on the path toward higher and more inclusive growth. Corruption undermines the quality of institutions, weakens the effectiveness of government programs, and compromises social trust in government policies. Indeed, countries around the world that improved their governance systems are reaping a “governance dividend,” and governance-enhancing reformist countries in sub-Saharan Africa include Botswana, Rwanda, and Seychelles. In addition, Liberia, Sierra Leone, and Angola demonstrate that important reforms are possible, including in fragile environments. The importance of good governance has acquired even more importance as countries try to introduce policies to fight the ongoing COVID-19 pandemic. Special attention to governance in an emergency context, including situations associated with conflict, other health crises and natural disasters, is therefore essential. Innovation and new technologies are critical instruments that policymakers can use in their efforts to improve governance and transparency.

Keywords:
Governance; financing; growth; emergencies; pandemic; digitization; resource-rich countries; fragile and conflict-afflicted countries; tax official; government effectiveness; governance indicator; corruption perception; governance challenge; government policy; Corruption; Auditing; Anti-money laundering and combating the financing of terrorism (AML/CFT); Oil; Sub-Saharan Africa; Africa; Global; Caribbean; Middle East; South Asia
Cover IMF Working Papers
Trade, Jobs, and Inequality
Ms. Kimberly Beaton
,
Ms. Valerie Cerra
, and
Metodij Hadzi-Vaskov
This paper examines the impact of trade on employment, wages, and other outcomes across countries and explores the conditions and policies that help spread the gains from trade more evenly throughout the population. We exploit a large global firm-level dataset to examine the impact of import competition on employment, wages, and firm performance, as well as the firm, industry, and country factors that mitigate any negative impact of an import shock. In contrast to the results of some well-known single-country studies, we find limited adverse impact of import competition. In some countries and industries, import competition actually strengthens employment growth. In addition, import competition tends to improve average wages, investment, and firm profitability. Country characteristics, such as educational attainment, can also improve employment prospects in response to trade shocks. Finally, we find that firms experiencing greater import competition start with higher average wages; thus any relatively slower employment growth in this group of firms could lead to lower inequality.
Keywords:
import competition; employment growth; import shock; firm investment; firm profitability; Imports; Employment; Competition; Wages; Income inequality; Global
Cover IMF Working Papers
Inflation, Financial Developments, and Wealth Distribution
Wai-Yip Alex Ho
and
Chun-Yu Ho
We find that from 1995 to 2002 in China, the dispersion of wealth decreased, the moneywealth ratio increased for all wealth levels and the aggregate money-output ratio increased. We develop a two-asset dynamic general equilibrium model in which households face a portfolio adjustment cost and a borrowing constraint. We find that financial development lowers the dispersion of wealth by reducing the precautionary motive of households. In addition, tight monetary policies increase the value of money and thus increase the moneywealth ratio for all wealth levels and the aggregate money-output ratio.
Keywords:
WP; adjustment cost; fiscal policy; inflation rate; Inflation; Borrowing Constraint; Heterogeneous Agents; Wealth Distribution; income process; calibrated economy; money-wealth ratio; financial assets holding; private-sector financial asset; Personal income; Income distribution; Consumption; Income shocks; Global; Wai-yip Alex Ho; wealth composition; Income
Cover IMF Working Papers
Growth and Capital Flows with Risky Entrepreneurship
Mr. Damiano Sandri
This paper shows that the behavior of entrepreneurs facing incomplete financial markets and risky investment can explain why growth accelerations in developing countries tend to be associated with current account improvements. The uninsurable risk of losing invested capital forces entrepreneurs to rely on self-financing, so that when business opportunities open up entrepreneurs increase saving to finance the investment that produces growth. The key insight is that saving has to rise more than investment to allow also for the accumulation of precautionary assets. Plausibly calibrated simulations show that this net saving increase can sustain large and persistent net capital outflows.
Keywords:
WP; open economy; interest rate; Investment Risk; Saving; Capital Flows; Financial Development; Growth; risk sharing; depreciation rate; failure risk; market-clearing wage; idiosyncratic risk; saving rate; economy dynamics; production function; financial market imperfection; Self-employment; Capital outflows; Income; Financial sector development; Wages; Eastern Europe
Cover IMF Working Papers
Small African Stock Markets—The Case of the Lusaka Stock Exchange
Ms. Heloisa Marone
In trend with a global pattern and following recommendations of the World Bank and the International Finance Corporation (IFC), the number of stock markets in African countries has increased dramatically over the last ten years. Despite a scarcity of studies on the impact of stock markets on these economies, some policymakers have been arguing in favor of stock exchanges (national or regional) in eastern and southern Africa. The creation of such exchanges may be a premature project as they might lack an actual economic rationale. The present case study, for instance, suggests that the Lusaka Stock Exchange (LuSE) has little effect on the larger Zambian economy.
Keywords:
WP; firm; investor; market; managed firm; yield; Financial Development; Stock Market; Small Economies; Zambia; rate of return; LuSE aggregate performance indicator; investor interest; Zambia's Lusaka Stock Exchange; nonpublic share; trading activity of the LuSE; investor category; foreigner investors trading; allocation decision; savings rate; investment manager; risk-averse investor; Stock markets; Stocks; Mutual funds; Capital markets; Liquidity; Sub-Saharan Africa; Global; Southern Africa; East Africa; Africa
Cover IMF Working Papers
How Intensive Is Competition in the Emerging Markets? An Analysis of Corporate Rates of Return from Nine Emerging Markets
Ajit Singh
,
Mr. Rudolph Matthias
, and
Mr. Jack D. Glen
This large empirical study of corporate profitability in emerging markets during the 1980s and 1990s measures the intensity of competition. Data on corporate rates of return, profit margins, and output-capital ratios reveal that the recent liberalization has been associated with reduced corporate profit margins and improved capital utilization efficiency. The paper also analyzes persistency in corporate profitability and finds that competitiveness was no less intense in developing countries than in advanced countries. Although the paper is not directly concerned with the Asian crisis, it provides evidence on important structural hypotheses about the crisis.
Keywords:
WP; liberalization firm; firm's earnings; developing country; market share; Corporate Rates of Return; Intensity of Competition; Emerging Markets; Peruvian cement company; time series; textile company; ith firm; regression coefficient; return on assets; Competition; Capital adequacy requirements; Emerging and frontier financial markets; Business enterprises; Manufacturing; East Asia