The influence of fiscal solvency on financial development: evidence for 140 countries, 1990–2020

Renzo A. Jiménez-Sotelo

Revista CEPAL, 2025

Abstract: If financial development facilitates economic development at the international level, as is the consensus view, then it follows that each government’s task is to implement policies that effectively boost national financial development. This study tests the new hypothesis that a more fiscally solvent policy approach positively influences financial development. The results, based on a yearly comparison, show that fiscal solvency, approximated by the credit rating on sovereign debt denominated in local currency, affects three dimensions of financial development: (i) the depth of credit leveraging of economic activity; (ii) the efficiency of the bank lending-deposit spread; and (iii) retail access through bank branches and automatic teller machines (ATMs). The test confirms that there is one tool upon whose importance not all macroeconomic policymakers have agreed in their strategic planning for enhanced general public welfare: fiscal solvency.

Date: 2025-04
References: Add references at CitEc
Citations:

Downloads: (external link)
http://repositorio.cepal.org/handle/11362/82407

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ecr:col070:82407

Access Statistics for this article

More articles in Revista CEPAL from Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL) Contact information at EDIRC.
Bibliographic data for series maintained by Biblioteca CEPAL ().