The Banking Sector, Government Bonds and Financial Intermediation: The Case of Emerging Market Countries

Gulcin Ozkan, Ahmet Kipici and Mustafa Ismihan ()

Discussion Papers from Department of Economics, University of York

Abstract: This paper develops an analytical framework to explore how financial sector characteristics shape domestic debt dynamics in emerging market economies. Our analysis suggests that the more competitive the banking sector and the more liquid and deeper the deposit market, the better would be the conditions in the public securities market. Our results also reveal that the lower the financial depth, the greater the scale of private sector credits that are crowded-out by public borrowing. To the extent that credit availability is associated with improved productivity and better output performance, the lack of financial depth in emerging market countries implies that extensive domestic borrowing in these countries may have consequences far beyond the concern with fiscal sustainability. As such, our results higlight the importance of developing domestic debt markets for financial and macroeconomic stability.

Keywords: Financial sector; public debt; cost of borrowing. (search for similar items in EconPapers)
JEL-codes: E52 E63 H63 (search for similar items in EconPapers)
Date: 2008-05
New Economics Papers: this item is included in nep-ban, nep-cwa and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.york.ac.uk/media/economics/documents/discussionpapers/2008/0811.pdf Main text (application/pdf)

Related works:
Journal Article: The Banking Sector, Government Bonds, and Financial Intermediation: The Case of Emerging Market Countries (2010)
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:yor:yorken:08/11

Access Statistics for this paper

More papers in Discussion Papers from Department of Economics, University of York Department of Economics and Related Studies, University of York, York, YO10 5DD, United Kingdom. Contact information at EDIRC.
Bibliographic data for series maintained by Paul Hodgson ().