Finance and Development

The new financial environment of the 1980s and 1990s has undoubtedly given rise to new risks that make the profitability of credit institutions increasingly uncertain. National and international financial transformations have led banks in Morocco to seek to expand their activities, open up internationally, and take more risk.
The Moroccan banking system suffers from a high amount of bad debts, insufficient provisioning and delays in debt collection. The objective of our study is to analyze the evolution of the fragility of Moroccan banks between 1993 and 2005.
We first assess the fragility of Moroccan commercial banks using the probabilistic method. Second, we analyze econometrically the relationship between the risk of default and the combination of some bank specific explanatory variables including equity. Our analysis shows that the evolution of the fragility of the Moroccan banking sector in general has decreased. This is mainly due to the importance of revenues from traditional operations and to the respect of prudential constraints on capital. On the other hand, bad loans seem to be the main threat of Moroccan banks, especially small banks which have seen their fragility increase during our analysis period.

"Thomas Marois’ groundbreaking interpretation of banking and development in Mexico and Turkey builds on a Marxian-inspired framework premised on understanding states and banks as social relationships alongside crisis and labor as vital to finance today. The book’s rich historical and empirical content reveals definite institutionalized relationships of power that mainstream political economists often miss.

While leading to a timely analysis of the impact of the Great Recession on Mexico and Turkey, the major contribution of States, Banks and Crisis is in its account of emerging finance capitalism. This is defined as the current phase of accumulation wherein the interests of financial capital are fused in the state apparatus as the institutionalized priorities and overarching social logic guiding the actions of state managers and government elites, often to the detriment of labor.

This interdisciplinary and accessible study on banking and development will prove to be an important resource for upper-level undergraduates, graduates, and scholars in economics, development studies, political science, political economy, development finance, sociology, international relations and international political economy.

Endorsement:

‘Financialization is as financialization does. It is a mix of the universal characteristics of finance within capitalism, its contemporary powerful hold over, even defining feature of, the neoliberal age, and the myriad of specific global markets and countries into which it has penetrated. In a stunning work of comparative political economy, Marois brilliantly weaves together these aspects of finance drawing on both innovative theoretical insights and primary case study evidence from Turkey and Mexico to furnish what will become a classic and original contribution to the understanding of financialization in the developing world, highlighting both the role of the state in the era of putatively free markets and the possibility, indeed, necessity of alternatives.’

– Ben Fine, University of London, UK"

Multilateral Development Banks (MDBs) play a crucial role in assisting Low-Income Countries (LICs) develop their economies. However, as the wealth of LICs increase, the graduation policies of the banks are often placed under scrutiny as hard lending terms could lead to increased poverty and, potentially, a relapse to concessional lending.  This paper explores when and how countries should graduate from concessional to non-concessional loans, as well as how various banks differ in their graduation policies and mechanisms.  Using an overview of existing literature and correspondence with CIDA experts on the topic of concessional loans, we believe that the ultimate effectiveness and success of current graduation mechanisms is contingent on the political and economic factors specific to each State. Consequently, it proves difficult to recommend a single streamlined approach to graduation through which LICs and MICs could successfully develop their economies and end reliance on concessional funds.

This study examines the long run and short run dynamics between financial intermediation development and economic growth in Nigeria using annual time series data spanning the period 1970-2015 by employing the VAR testing approach, Johansen co integration testing technique and Engle and granger causality test. The results indicate that there is a presence of long run equilibrium between financial intermediation development indicators and economic growth. This implies that both indicators affect Nigeria economy in the long run while the VAR result shows that both indicators of financial intermediation development exhibit positive and negative signs when lagged once or twice and this relation is low and insignificant especially in the case of credit to private sector to GDP, this coefficient did not show the expected sign. A possible explanation for this is that credits to private sector are not channeled to productive uses but are diverted to other personal uses. The result of causality shows a unidirectional causality running from the financial intermediation development indicators to real GDP and not vice versa. The study concludes that M2 to GDP exert more influence on the Nigeria economy than the credit to private to GDP. As such it was recommended that policy on financial development should be emphasized in other to propel and stir up economic growth in Nigeria.

The thesis is concerned with the growth of 'connected' firms, characterised as small firms that are engaged in stable spatial and vertical network relationships, involving a variety of actors, including larger firms. It locates these firms within the landscape of the 'New Competition', (Best 1990, 2001), highlighting the relatively unexplored region occupied by connected artisanal firms. The literature review is constructed around a detailed re-appraisal of Edith Penrose's (1959) study, The Theory of the Growth of the Firm, which traces its antecedents, reconstructs its interconnections and calibrates its explanatory potential against the work of contemporaries, successors and opponents. The review provides the basis for development of a modified Penrosian framework, designed to embrace a multi-level analysis of growth processes that span the 'blurred boundaries' of the connected firm. An empirical study of the growth of connected artisanal firms demonstrates the application of this modified framework. The study is presented in the form of an analytically structured narrative, illustrated by network mapping sequences and informed by a qualified critical realist perspective. The final chapters reflect on the theoretical, methodological and practical policy implications of the study, highlighting the broader implications for researching the growth of other forms of connected firm. Dedication For my parents. I have gained enormously from the ideas, comments, practical assistance and moral support of very many people, some of whom are identified here. Peter Clark has been a vital source of productive opportunity, offering obscure references, challenging questions, subtle guidance and stimulating conversation. I am much indebted to John Child and Michael Rowlinson, and to a number of people at the Univerity of Birmingham, including Barbara Satchwell, Jennifer Tann, Jane Whitmarsh and colleagues in Information Services, Postgraduate Student Services and the Bindery. Others have helped in specific areas of the research. Steve Conway provided valuable insights into network mapping and, more broadly into ways in which network theory might enhance the analysis. Bengt Johannisson gave several useful suggestions regarding entrepreneurial networking, along with valued comments on a draft paper; Martin Hingley, Brian Shaw and David Smith shared their deep experience of innovation networks and industry supply chains. These networking ideas were developed in discussions with Udo Staber, Boris Blumberg and other members of the EGOS Standing Working Group on Business Networks, including Mark Ebers, Anna Grandori, David Knoke, Amalya Oliver, Brian Pentland and Jörg Sydow. Some initial thoughts on Edith Penrose and critical realism were stimulated in a seminar given by Christos Pitelis and chaired by Tony Lawson. I am also grateful to David Musson for reflections on working with Penrose on the Third Edition of The Theory of the Growth of the Firm, and to Brian Loasby for an helpful discussion regarding her intellectual legacy. Others, who kindly responded to my

This article traces the uneven development of English cheese-making, from its early commercialization to the eventual triumph of the “cheese factory.” The narrative shows how contemporary actors initiated and adapted to changes in technology, distribution, consumption, and regulation. It indicates that artisanal practices have both borrowed from, and become integrated with, industrial logics and strategies, exemplifying a process that Charles F. Sabel and Jonathan Zeitlin termed the “recombinablility and interpenetration” of different forms of economic organization [World of Possibilities: Flexibility and Mass Production in Western Industrialization (Cambridge. 1997), 2-3]. International comparisons are introduced in order to clarify the reasons for England’s halting and idiosyncratic transition to industrial-scale cheese-making.

Financial repression in a developing country is not new to us. The government may take policy for financial repression due to easy collection of inflation tax to the stage of economic development. This study is concerned to find the positive relationship between financial development and economic growth and productivity in the economy of Bangladesh. The research concluded that the financial repression has a negative relationship to the economic growth and productivity but the financial development is positively to relate the economic growth and productivity in the economy of Bangladesh. This study found evidence that the effect of financial repression is positive to the financial development in Bangladesh as it was to the high growth period in Japan. But the scenario was different for Latin American countries. Transition to the financial development from the stage of financial repression to the stage of financial liberalization is found positive to the economic growth and productivity in Bangladesh. The rural finance in agro sector is statistically significant at the level of 5% in two tail test and contributing financial sector development where the urban finance is still suffering various economic distortions to the economic growth and productivity.

It is time to revive this debate, to unearth actually existing potential alternatives, and to strategise the anti-capitalist role that banking and finance can serve in alternative development. To this end this chapter seeks to make a modest contribution. It does so by suggesting that the struggle for the democratised control of banks is a necessary, if not sufficient, condition for any substantive anti-capitalist break with neoliberal financial capitalism. I argue this by first exploring what financial capital looks like in relation to development today, thus setting the basis of why finance must be confronted in any strategy of change. Second, I consider what needs to be done by drawing on some past and present examples suggestive of alternative democratic and sustainable banking alternatives. This is followed by a brief conclusion.

J o u r n a l o f A c c o u n t i n g a n d M a n a g e m e n t J A M v o l. 5 , n o. 3 (2 0 1 5) Abstract : Unlike small and medium scale enterprises, there is no doubt that cooperative societies have attracted little attention from both the public and private sectors. This is not the case in industrialized countries such as Denmark, USA, Great Britain, etc; where they have contributed immensely to the GDP of their respective economies. A review by various scholars of the various ways of financing cooperatives in Nigeria reveals that there is no adequate nationwide financing agency. This study aims among others to review through historical data the operational and policy frameworks of the global and Nigerian cooperatives societies and other dependent cooperatives scattered all over the globe and their emerging trends in sourcing for funds. The methodology used is the content analysis. Historical (secondary data) such as journals, articles, textbooks, newspapers and Internet etc are employed. The paper identified the financing gap existing in cooperative movement in order for them to assume their proper position in the scheme of things in an emerging global economy. This paper recommends that amongst others that the Small and Medium Industries Equity Investment Scheme (An initiative of the Bankers Committee) should be extended to Nigerian Cooperative Societies.

Purpose-This paper aims to offer a preliminary overview and analysis of the impact of the COVID-19 crisis on commodity-dependent developing economies (CDDEs). Using debt, decarbonisation and demand as empirical and analytical prisms to understand impacts and dynamics, the paper offers "rent space" as a theoretical tool to appreciate the changing possibilities for using resource rents for capital accumulation and expand development frontiers. It maps out the certain common features among this group of developing countries facing an increasingly adverse and uncertain situation. It offers a political economic perspective on the global dynamics and internal political situation that constrain these countries' ability to manage the effects of this external shock that date to the 2008 crisis, and to therefore shore up an effective recovery in the coming years. Design/methodology/approach-The paper draws together secondary literature and evidence from a number of sources including the World Bank, United Nations and International Monetary Fund on the empirical situation in these countries in view of COVID-19. The paper uses a thematic approach to understand how the current crisis has exposed these embedded and worsening vulnerabilities in this group of countries. Findings-Results demonstrate the wide-ranging effects of COVID-19 as an existential crisis of demand in short and medium term, the explosion of debt due to actually occurring financialisation and the looming medium and long-term consequences of decarbonisation that may oblige countries to abandon exploitation of fossil fuel resources. Originality/value-In the final analysis, COVID-19 has revealed a number of lingering effects of the commodity boom and global financial crisis. The increased indebtedness that resulted not only underscores the long-term unviability of commodity-based development as a strategy but also reveals new unprecedented weaknesses and challenges. Given the current configuration of global and domestic political economy dynamics, the paper shows that the "rent space" in fossil fuel exporters is particularly constrained and shrinking, compared to mineral exporters, but all showing a trend towards concentration in commodity production overall and worsening prospects for green recovery or industrial pathway.

This paper attempts to answer the question of how the uncertainty of stock price behaviour affected monetary policy decisions in Nigeria during the period 1991Q1-2015Q4. Although studies have been conducted on how the stock market responds to monetary policy decisions there is a paucity of analysis on how stock prices and the uncertainty of stock prices affect monetary policy, especially in Nigeria. Data was obtained from the Central Bank of Nigeria statistical database. Both Generalised Autoregressive Conditional Heteroskedasticity modelling and Generalised Method of Moments estimation were used for analysis. Findings from the regression analysis reveal that stock prices, as well as their unpredictable behaviour, significantly affect monetary policy decisions during the period under study. Another interesting finding is that the pair of the uncertainty of real output and inflation also significantly affected the monetary policy rate and that the monetary authority was more responsive to this pair than that of inflation and stock prices. The recommendation based on our findings is that the Central Bank of Nigeria should incorporate the uncertainty of stock prices into the monetary policy model when determining the policy rate.

Previous research on the growth of born-global firms has mostly focused on the nature of being and becoming born global but little attention has been paid to the theoretical foundation of the growth of a born-global venture. Drawing on the insights from the Austrian school of economics as a prevalent view of the growth in strategy and entrepreneurship this paper develops and discusses an Austrian view of born global growth. It will be shown that this perspective could advance literature in the international business and in particular adds to and extend the currently limited knowledge on the foundations of the growth of born-global firms.

Purpose – The purpose of this paper is to determine if the relationship between growth and research
and development (R&D) intensity is of a different nature in the context of low- and high-tech
Portuguese service small to medium-sized enterprises (SMEs).
Design/methodology/approach – The System Analysis of Iberian Balance Sheets database is used.
Based on the European Union’s recommendation, L124/36 (2003/261/CE), the authors select 764 low-tech and
139 high-tech Portuguese service SMEs for the period 1999-2006.Asmethod of analysis, panel data are used.
Findings – A negative relationship between growth and R&D intensity for low-tech Portuguese
service SMEs is identified, whatever the level of R&D intensity. For high-tech Portuguese service
SMEs, a quadratic U-shaped relationship between growth and R&D intensity is identified. Moreover,
the authors find that relationships between growth and determinants are of a special nature in the
context of high-tech Portuguese service SMEs with high levels of R&D intensity.
Practical implications – It is recommended that as far as possible the managers/owners of low-tech
Portuguese service SMEs, and especially high-tech ones with non-high levels of R&D intensity, hire
qualified human resources and make more continuous investment in R&D. The authors advise
managers/owners of high-tech Portuguese service SMEs with high levels of R&D intensity to establish
stable relationships with creditors. Policy-makers should increase financial support directed, above all,
to innovative Portuguese service SMEs.
Originality/value – The paper is pioneering in presenting different relationships between growth
and R&D intensity in the context of low- and high-tech service SMEs.

The paper reexamines empirically the robustness of competing theories of foreign aid e¤ectiveness. By shifting the focus from the e¤ects of aid on income to to e¤ects of aid on productivity, it is possible to put to test 3 existing theories of foreign aid e¤ectiveness. The results provide support for the hypotheses that (i) aid has a positive e¤ect in fostering growth of average productivity, (ii) aid doesn't operate with diminishing returns, and (iii) the magnitude of the total e¤ect depends on climate-related circumstances. The results support the policy recommendation previously made in the literature to seriously reconsider the conditionality rule for foreign aid disbursements.

Using a unique dataset which provides information on the financial structure of start-up companies in the Chinese manufacturing industry, this paper documents robust evidence that access to formal financing channels has beneficial effects on firm size, these effects being more marked as we move up the entry size distribution. By contrast we find negative relationships between informal finance and entry size across all size quantiles. Given the well-documented positive correlations between firm size and numerous performance indicators, this paper has therefore uncovered entry size as an additional channel through which financial development promotes growth.

Unlike small and medium scale enterprises, there is no doubt that cooperative societies have attracted little attention from both the public and private sectors. This is not the case in industrialized countries such as Denmark, USA, Great Britain, etc; where they have contributed immensely to the GDP of their respective economies. A review by various scholars of the various ways of financing cooperatives in Nigeria reveals that there is no adequate nationwide financing agency. This study aims among others to review through historical data the operational and policy frameworks of the global and Nigerian cooperatives societies and other dependent cooperatives scattered all over the globe and their emerging trends in sourcing for funds. The methodology used is the content analysis. Historical (secondary data) such as journals, articles, textbooks, newspapers and Internet etc are employed. The paper identified the financing gap existing in cooperative movement in order for them to assum...

Unlike small and medium scale enterprises, there is no doubt that cooperative societies have attracted little attention from both the public and private sectors. This is not the case in industrialized countries such as Denmark, USA, Great Britain, etc; where they have contributed immensely to the GDP of their respective economies. A review by various scholars of the various ways of financing cooperatives in Nigeria reveals that there is no adequate nation-wide financing agency. This study aims among others to review through historical data the operational and policy frameworks of the global and Nigerian cooperatives societies and other dependent cooperatives scattered all over the globe and their emerging trends in sourcing for funds. The methodology used is the content analysis. Historical (secondary data) such as journals, articles, textbooks, newspapers and Internet etc are employed. The paper identified the financing gap existing in cooperative movement in order for them to assu...

GIGA Working Papers serve to disseminate the research results of work in progress prior to publicaton to encourage the exchange of ideas and academic debate. Inclusion of a paper in the Working Papers series does not constitute publication and should not limit publication in any other venue. Copyright remains with the authors.

This paper offers a critical review of the ‘single argument’ that underpins Penrose’s (1959) study, The Theory of the Growth of the Firm (TGF) It aims to complement and counter-point recent examinations of Penrose’s influence on strategic management, and on the resource-based view (RBV) in particular, including Jacobsen’s (2011) study. The paper examines six components of the argument, tracing their inter-connected journey towards TGF’s relatively neglected final chapters, which address the economic consequences of the growth of large firms. It also reflects on the implications for economic development research, with reference to Penrose’s later (1992) critique of contemporary liberalisation policies.

This paper investigates the effects of tax incentives on investment growth in the tourism sector in less developed countries, using Zimbabwe as the case study. The study was prompted by the realisation that many less developed countries use tax incentives as means for luring investors into their countries yet there is a general lack of analysis on whether such tax incentives have any impact on social and capital growth. The study employed face-to-face and telephone interviews with key stakeholders in the tourism sector that were selected through stratified and random sampling methods. Questionnaires, distributed by hand, post and email were also used in situations where interviews were not feasible. Secondary data was used as a bedrock for detailed analysis. The paper established that most policy makers indeed use tax incentives to lure investors into the tourism industry but such policies are not followed by other supportive policies in other areas of the economy that help boost in...

Contents: 1. Introducing Emerging Finance Capitalism 2. States, Banks, and Crisis in Emerging Finance Capitalism 3. States, Banks, and the History of Postwar Development in Mexico and Turkey 4. Neoliberal Idealism, Crisis, and Banking in Mexico's State-led Structural Transformation, 1982 - 94 5. Crisis and the Neoliberal Idealism of State and Bank Restructuring in Turkey, 1980 - 2000 6. Another Round of Tequila? Interpreting the Costs and Benefits of Emerging Finance Capitalism in Mexico 7. Richer than Croesus? Understanding the Subordination of State and Banks to Emerging Finance Capitalism in Turkey 8. Comparing Alternatives in an Era of Emerging Finance Capitalism Bibliography Index

The thesis is concerned with the growth of ‘connected’ firms, characterised as small firms that are engaged in stable spatial and vertical network relationships, involving a variety of actors,
including larger firms.  It locates these firms within the landscape of the ‘New Competition’, (Best 1990, 2001), highlighting the relatively unexplored region occupied by connected artisanal firms.  The literature review is constructed around a detailed re-appraisal of Edith Penrose’s (1959) study, The Theory of the Growth of the Firm, which traces its antecedents, re-constructs its interconnections and calibrates its explanatory potential against the work of contemporaries, successors and opponents. The review provides the basis for development of a modified Penrosian framework, designed to embrace a multi-level analysis of growth
processes that span the ‘blurred boundaries’ of the connected firm.  An empirical study of the growth of connected artisanal firms demonstrates the application of this modified framework. 
The study is presented in the form of an analytically structured narrative, illustrated by network mapping sequences and informed by a qualified critical realist perspective.  The final chapters reflect on the theoretical, methodological and practical policy implications of the study, highlighting the broader implications for researching the growth of other forms of connected firm.

The technological environment or climate is the national setting in which technology-based initiatives are taken. Similar production units in two different countries have not always produced comparable results. A primary reason for this is that the national ‘technology climate’ differs from one country to another. An important aspect of the creation of appropriate climate for technology-based development is the promotion of S&T culture in the country through effective cross-fertilization of technology players. With this empirical perception, this paper has made an extensive study on the nature and magnitude of the promotion of a suitable technology climate conducive to the development of productivity leading to growth in the economy of Bangladesh. In doing so, this paper conducted a review of the available measures of S&T assessment and found that empirical literature possesses serious lacks in scientific estimation procedures. At the end, the study concluded that the economy of Bangladesh could not yet ensure competitive S&T environment and lags far behind not only the East Asian economies but also some developing economies like India.