Financial sector development and access to finance. Does size say it all?

Céline Gimet and Thomas Lagoarde-Segot
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Thomas Lagoarde-Segot: DEFI - Centre de recherche en développement économique et finance internationale - GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, Euromed Marseille - École de management - Association Euromed Management - Marseille

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Abstract: This paper analyzes what features of financial systems can strengthen the linkages between banks and economic development. We investigate whether a set of banking and capital market characteristics can improve the ability of banks to provide increased credit flows to the private sector, while simultaneously improving financial inclusion for the poor. We analyze the determinants of both macro-level lending conditions and micro-level access to finance using a set of Panel Vector Error Correction Models and GMM estimations in a panel of 138 countries for the 2002-2009 time periods. Results converge to suggest that rather than focusing solely on banking sector size, financial policy should seek to foster inter banks competition, develop appropriate macro-prudential safeguards, promote capital market development. In addition, improved access to finance requires adequate civil rights and support to entrepreneurship.

Keywords: finance; development; institutions; GMM; PVEC (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (25)

Published in Emerging Markets Review, 2012, 13 (3), pp. 316-337. ⟨10.1016/j.ememar.2011.11.002⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00764518

DOI: 10.1016/j.ememar.2011.11.002

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