To see the other types of publications on this topic, follow the link: Theory of financial intermediation.
Journal articles on the topic 'Theory of financial intermediation'
Create a spot-on reference in APA, MLA, Chicago, Harvard, and other styles
Consult the top 50 journal articles for your research on the topic 'Theory of financial intermediation.'
Next to every source in the list of references, there is an 'Add to bibliography' button. Press on it, and we will generate automatically the bibliographic reference to the chosen work in the citation style you need: APA, MLA, Harvard, Chicago, Vancouver, etc.
You can also download the full text of the academic publication as pdf and read online its abstract whenever available in the metadata.
Browse journal articles on a wide variety of disciplines and organise your bibliography correctly.
1
Allen, Franklin, and Anthony M. Santomero. "The theory of financial intermediation." Journal of Banking & Finance 21, no. 11-12 (December 1997): 1461–85. http://dx.doi.org/10.1016/s0378-4266(97)00032-0.
Full text
2
Merz, Markus. "Contemporaneous financial intermediation." Digital Finance 3, no. 1 (March 2021): 25–44. http://dx.doi.org/10.1007/s42521-021-00029-3.
Full textAbstract:
AbstractDigital innovations in banking and payments recently have garnered a great deal of attention. Specifically, distributed ledger technology (DLT) has the potential to fundamentally change the roles and responsibilities of stakeholders in the financial sector. DLT is a novel and fast-evolving approach to record and share data, e.g., payment transactions, among members of a decentralized network. Using transaction cost theory, the paper examines how DLT will change the cross-border payment infrastructure. DLT can reduce the overall transaction costs potentially resulting in the disappearance of correspondent banks.
3
Hester, Donald D. "On the theory of financial intermediation." De Economist 142, no. 2 (May 1994): 133–49. http://dx.doi.org/10.1007/bf01388162.
Full text
4
Bongomin, George Okello Candiya, Francis Yosa, Joseph Baleke Yiga Lubega, Pierre Yourougou, and Alain Manzi Amani. "Financial Intermediation by Microfinance Banks in Rural Sub-Saharan Africa: Financial Intermediation Theoretical Approach." Journal of Comparative International Management 24, no. 2 (January 26, 2022): 1–27. http://dx.doi.org/10.7202/1085565ar.
Full textAbstract:
Premised on Meta analysis of financial intermediation theory by Gurley and Shaw (1960), Leland and Pyle (1977), Diamond and Dybvig (1983), Allen and Santomero (1996), Scholtens and van Wensveen (2000), the main purpose of this study is to test for the predictive power of each of the dimensions of financial intermediation of market penetration and quality of financial services on financial inclusion of the poor by microfinance banks in rural sub-Saharan Africa grounded on the financial intermediation theory. This study adopted a cross-sectional research design and data were collected from 400 poor households located in rural Uganda. The data were analyzed using ordinary least square hierarchical regression (OLS) in SPSS (statistical packages for social sciences) to generate the explanatory power of each of the dimensions of financial intermediation on financial inclusion based on coefficient of determination (R²). In addition, results from analysis of variances (ANOVA) were also generated to establish the differences in the perceptions of the poor towards being financially included through financial intermediation. The results revealed that market penetration and quality of financial services as dimensions of financial intermediation significantly explains 22 percent of the variation in financial inclusion of the poor in rural Uganda. Additionally, when individual effects were considered, both market penetration and quality of financial services had significant and positive effects on financial inclusion of the poor in rural Uganda. Accordingly, our study contributes and recommends specific policies toward the role of financial intermediaries in financial deepening, especially in rural sub-Saharan Africa where there are limited presence of traditional banking structures to serve the unbanked rural poor households.
5
SEWARD, JAMES K. "Corporate Financial Policy and the Theory of Financial Intermediation." Journal of Finance 45, no. 2 (June 1990): 351–77. http://dx.doi.org/10.1111/j.1540-6261.1990.tb03694.x.
Full text
6
Bethune, Zachary, Bruno Sultanum, and Nicholas Trachter. "An Information-Based Theory of Financial Intermediation." Federal Reserve Bank of Richmond Working Papers 19, no. 12 (July 2, 2019): 1–71. http://dx.doi.org/10.21144/wp19-12.
Full text
7
Mehra, Rajnish, Facundo Piguillem, and Edward C. Prescott. "Costly financial intermediation in neoclassical growth theory." Quantitative Economics 2, no. 1 (March 2011): 1–36. http://dx.doi.org/10.3982/qe40.
Full text
8
Scholtens, Lambertus J. R. "On the theory of international financial intermediation." De Economist 140, no. 4 (December 1992): 470–87. http://dx.doi.org/10.1007/bf01725240.
Full text
9
Shabir, Tayyeb. "Financial Intermediation and Growth: Theory and Some Cross-Country Evidence." Pakistan Development Review 36, no. 4II (December 1, 1997): 855–62. http://dx.doi.org/10.30541/v36i4iipp.855-862.
Full textAbstract:
Well-functioning financial markets can have a positive effect on economic growth by facilitating savings and more efficient allocation of capital. This paper characterises some of the recent theoretical developments that analyse the relationship between financial intermediation and economic growth and presents empirical estimates based on a model of the linkage between financially intermediated investment and growth for two separate groups of countries, developing and advanced. Empirical estimates for both groups suggest that financial intermediation through the efficiency of investment leads to a higher rate of growth per capita. The relevant coefficient estimates show a higher level of significance for the developing countries. This financial liberalisation in the form of deregulation and establishment and development of stock markets can be expected to lead to enhanced economic growth.
10
Jayasekara, S. G. Sisira Dharmasri, K. L. Wasantha Perera, and A. Roshan Ajward. "Fair Value Accounting Practices and Efficiency of Banks: A Theoretical Perspective." Accounting and Finance Research 7, no. 4 (September 27, 2018): 66. http://dx.doi.org/10.5430/afr.v7n4p66.
Full textAbstract:
This conceptual paper discusses the impact of fair value accounting practices on performance of commercial banks in relation to the established banking theories i.e. Credit creation, fractional reserve and financial intermediation theory. These theories are discussed in view of historical cost accounting principles and fair valued accounting principles considering the performance in terms of efficiency during different stages of economic conditions. The analysis shows that fair value accounting practices in banks create reserves in economic booms improving efficiency and deteriorate created reserves in economic downturns causing financial crises. Enhanced financial performance in terms of unrealized gains improves the overall efficiency of banks in view of the intermediation approach of the financial intermediation theory. Therefore, it can be interpreted that external factors such as accounting, infrastructure, and technology can influence efficiency of the financial intermediation process. This is the first study to discuss the implications of fair value accounting on banking theory in view of performance of banks and stability of financial system.
11
Giscard, Moutie, Ntomane Roland, and Elle Serge MESSOMO. "Determinants of Financial Intermediation: Empirical Evidence from Cameroonian Commercial Banks." Archives of Business Research 10, no. 2 (March 16, 2022): 287–300. http://dx.doi.org/10.14738/abr.102.11903.
Full textAbstract:
Current financial intermediation theory is build on the notion that intermediaries serve to reduce transaction costs and informational asymmetries. As developments in information technology, deregulation, deepening of financial markets tend to reduce transaction costs and informational asymmetries, financial intermediation theory shall come to the conclusion that intermediation becomes useless. It also conflicts with the continuing and increasing economic importance of financial intermediaries. Cameroonian economic policy from 1988 restructured the financial sector towards a greater Financial Intermediation (FI). This article seeks to identify the determining factors of FI in Cameroon in relation with the practitioner’s view of financial intermediation as a value-creating economic process. In order to attain this principal objective, we use secondary data for the period 1977 to 2016. This analysis is done with three multiple linear regressions which emphasise on FI’s determinants in respect to FI’s components. The study shows that deposit interest rate positively affects FI through credit and monetary mass and negatively through intermediation margin. The expected inflation rate positively influences FI via intermediation margin and negatively through credit and monetary mass. The interest rate on loans and minimum reserves are directly linked to the components of FI (monetary mass and intermediation margin). This could be explained by the restructuring of the banking system, bank overliquidity, MFE’s instability and poor growth environment. Thus banks might consolidate their management system in order to ensure their credibility as well as their continuity.
12
Potemkin, Sergey, Sergey Chernykh, and Tatiana Larina. "Financial intermediation of banks: theory and new practice." Regionalnaya ekonomika. Yug Rossii, no. 2 (2017): 102–11. http://dx.doi.org/10.15688/re.volsu.2017.2.12.
Full text
13
Scholtens, Bert, and Dick van Wensveen. "A critique on the theory of financial intermediation." Journal of Banking & Finance 24, no. 8 (August 2000): 1243–51. http://dx.doi.org/10.1016/s0378-4266(99)00085-0.
Full text
14
Chan, Jackie M. L. "Financial frictions and trade intermediation: Theory and evidence." European Economic Review 119 (October 2019): 567–93. http://dx.doi.org/10.1016/j.euroecorev.2018.04.002.
Full text
15
R.C., Ejinkonye, and Okonkwo I.V. "Nexus Between Financial Innovation and Financial Intermediation in Nigeria’s Banking Sector." African Journal of Accounting and Financial Research 4, no. 3 (December 13, 2021): 162–79. http://dx.doi.org/10.52589/ajafr-vn7jrc1z.
Full textAbstract:
This study evaluated the relationship between financial innovation and financial intermediation in Nigeria. It seems that banks in Nigeria may have a problem of deposit-loan mismatch and losing customers to start-ups given increasing cost of deposits attributable to disruptive practice arising from financial innovations. The specific objectives of this study were to examine the relationship between financial innovation (value of the automated teller machine, internet banking, mobile banking, point of sale transactions) and financial intermediation (commercial banks deposit mobilization) in Nigeria for the period 2009–2018. This study was anchored on the financial innovation theory of Joseph Schumpeter, which states that technology creates opportunities for new profits and super profits as a result of increased investment by banks or financial institutions on products of innovation. The ordinary least square was used to estimate the parameters. The data used were extracted from the Central Bank of Nigeria statistical bulletin. The results showed that there is a positive and significant relationship between financial innovation (value of Automated Teller Machine) and financial intermediation (commercial banks deposit mobilization) in Nigeria; there is a positive but no significant relationship between financial innovation (internet banking) and financial intermediation (commercial banks deposit mobilization) in Nigeria; there is a positive but no significant relationship between financial innovation (mobile banking) and financial intermediation (commercial banks deposit mobilization) in Nigeria; and there is no positive and significant relationship between financial innovation (point of sale transactions) and financial intermediation (commercial banks deposit mobilization) in Nigeria. The f-test result showed that financial innovations proxies jointly related significantly to commercial banks’ deposits. The work concludes that financial innovations contributed to commercial banks’ deposits in Nigeria. The researchers recommended among others that banks should improve on the security of transactions done on their platforms, continue to improve and partner with start-ups in technological infrastructure, improve on power and network stability, deploy more innovative products, and improve on the efficiency of bank staff by regular training.
16
FARHI, EMMANUEL, MIKHAIL GOLOSOV, and ALEH TSYVINSKI. "A Theory of Liquidity and Regulation of Financial Intermediation." Review of Economic Studies 76, no. 3 (July 2009): 973–92. http://dx.doi.org/10.1111/j.1467-937x.2009.00540.x.
Full text
17
Molnár, Júlia. "What does financial intermediation theory tell us about fintechs?" Vezetéstudomány / Budapest Management Review 49, no. 5 (May 23, 2018): 38–46. http://dx.doi.org/10.14267/veztud.2018.05.04.
Full text
18
TEMIN, PETER. "Financial Intermediation in the Early Roman Empire." Journal of Economic History 64, no. 3 (September 2004): 705–33. http://dx.doi.org/10.1017/s0022050704002943.
Full textAbstract:
I evaluate the effectiveness of financial markets in the early Roman Empire in this article. I review the theory of financial intermediation to describe a hierarchy of financial sources and survey briefly the history of financial intermediation in eighteenth-century Western Europe to provide a standard against which to evaluate the Roman evidence. I then describe the nature of financial arrangements in the early Roman Empire in terms of this hierarchy. This exercise reveals the extent to which the Roman economy resembled more recent societies and sheds light on the prospects for economic growth in the Roman Empire.
19
Bongomin, George Okello Candiya, John C. Munene, Joseph Mpeera Ntayi, and Charles Akol Malinga. "Collective action among rural poor." International Journal of Bank Marketing 37, no. 1 (February 4, 2019): 20–43. http://dx.doi.org/10.1108/ijbm-08-2017-0174.
Full textAbstract:
PurposeThe purpose of this paper is to establish the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe paper uses structural equation modeling (SEM) through bootstrap approach constructed using analysis of moment structures to test for the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. Besides, the paper adopts Baron and Kenny’s (1986) approach to establish whether conditions for mediation by collective action exist.FindingsThe results revealed that collective action significantly mediates the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. The findings further indicated that the mediated model had better model fit indices than the non-mediated model under SEM bootstrap. Furthermore, the results showed that both collective action and financial intermediation have significant and direct impacts on financial inclusion of the poor in rural Uganda. Therefore, the findings suggest that the presence of collective action boost financial intermediation for improved financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study used quantitative data collected through cross-sectional research design. Further studies through the use of interviews could be adopted in future. Methodologically, the study adopted use of SEM bootstrap approach to establish the mediating effect of collective action. However, it ignored the Sobel’s test and MedGraph methods. Future studies could adopt the use of alternative methods of Sobel’s test and MedGraph. Additionally, the study focused only on semi-formal financial institutions. Hence, further studies may consider the use of data collected from formal and informal institutions.Practical implicationsPolicy makers and managers of financial institutions should consider the role of collective action in promoting economic development, especially in developing countries. They should create structures and design financial services and products that promote collective action among the poor in rural Uganda.Originality/valueAlthough several scholars have articulated financial inclusion based on both the supply and demand side factors, this is the first study to test the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda using SEM bootstrap approach. Theoretically, the study combines the role of collective action with financial intermediation to promote financial inclusion. Financial intermediation theory ignores the role played by collective action in the intermediation process between the surplus and deficit units.
20
Swamy, Vighneswara. "Macroeconomic significance of transaction costs in microfinance intermediation." Management Decision 57, no. 9 (October 15, 2019): 2307–24. http://dx.doi.org/10.1108/md-01-2018-0073.
Full textAbstract:
PurposeThe purpose of this paper is to analyze the macroeconomic significance of transaction costs in microfinance intermediation and explain how the deposit mobilization and micro lending impact the microfinance transaction costs. It presents some empirical evidence as building blocks for the theory of financial intermediation that aims at strengthening the efficiency of financial intermediation in the context of preferential credit and or the microfinance sector.Design/methodology/approachThe study uses the panel data consisting of different groups of banks in India (such as public sector banks, private banks and foreign banks) data across a period from March 1993 to March 2009 to estimate the panel VAR model to determine the determinants of transaction cost model in financial intermediation. The study also uses the panel Granger causality analysis to test the direction of causation to know the behavior of the operating expense of the banks in their financial intermediation process.FindingsThe study reveals that there is a positive direct relationship between operating expense and priority sector lending by banks. The findings show that the transaction costs act as a barrier for the banking firms in microfinance intermediation; and, the banks are able to manage the transaction costs of microfinance intermediation with an increase in overall deposit mobilization and increased non-microfinance lending. The study recommends that there is a need to upscale the functional efficiency of microfinance intermediaries.Originality/valueThis study offers to bridge the research gap and adds novel information to the literature on microfinance intermediation. It is the first empirical paper showing the macroeconomic significance of transaction costs in microfinance intermediation.
21
He, Zhiguo, and Arvind Krishnamurthy. "Intermediary Asset Pricing and the Financial Crisis." Annual Review of Financial Economics 10, no. 1 (November 2018): 173–97. http://dx.doi.org/10.1146/annurev-financial-110217-022636.
Full textAbstract:
Intermediary asset pricing understands asset prices and risk premia through the lens of frictions in financial intermediation. Perhaps motivated by phenomena in the financial crisis, intermediary asset pricing has been one of the fastest-growing areas of research in finance. This article explains the theory behind intermediary asset pricing and, in particular, how it is different from other approaches to asset pricing. This article also covers selective empirical evidence in favor of intermediary asset pricing.
22
Okello Candiya Bongomin, George, Charles Akol Malinga, John C. Munene, and Joseph Mpeera Ntayi. "Institutional framework in developing economies." Journal of Financial Regulation and Compliance 26, no. 2 (May 14, 2018): 271–86. http://dx.doi.org/10.1108/jfrc-02-2017-0025.
Full textAbstract:
Purpose The purpose of this paper is to establish the relationship between institutional framework of regulative (formal rules), normative (informal norms) and cultural-cognitive (cognition), and their effects on financial intermediation by microfinance deposit taking institutions (MDIs) in developing economies like Uganda. Design/methodology/approach Data collected from a total sample of 400 poor households and 40 relationship officers located in rural Uganda were processed using statistical package for social sciences and analysis of moment structures to establish the relationship between institutional framework of regulative, normative and cultural-cognitive, and their effects on financial intermediation by MDIs in developing economies. Findings The results showed that the three dimensions of regulative (formal rules), normative (informal norms) and cultural-cognitive (cognition) significantly affect financial intermediation by MDIs in developing economies like Uganda. In addition, as a unique finding, two new dimensions of procedural and declarative cognition emerged from cultural-cognitive framework to determine financial intermediation among MDIs in developing economies, specifically in Uganda. Research limitations/implications The study collected data from only poor households and relationship officers located in rural Uganda. It ignored peri-urban and urban areas in Uganda. In addition, the study focused only on MDIs and ignored other financial institutions. Besides, the study was purely quantitative, therefore, further research through interviews may be useful in future. Furthermore, the study was carried out in rural Uganda as a developing economy. Thus, future research using the same variables in other developing economies may be useful. Practical implications Managers of financial institutions and policy makers should know that market functions of financial intermediaries in developing economies are promoted by institutional framework of regulative, normative and procedural and declarative cognition that lowers transaction cost and promotes information sharing. Therefore, more efforts should be directed towards strengthening the existing institutional framework of regulative, normative and cognition to promote financial intermediation by financial institutions such as MDIs. Originality/value This paper is the first to test the relationship between institutional framework and their effects on financial intermediation by MDIs in developing economies. The results revealed existence of two new factor structures of procedural and declarative cognition in explaining financial intermediation by MDIs in developing economies like Uganda. This is sparse in financial intermediation literature and theory.
23
Marini, François. "Financial intermediation in the theory of the risk-free rate." Journal of Banking & Finance 35, no. 7 (July 2011): 1663–68. http://dx.doi.org/10.1016/j.jbankfin.2010.11.009.
Full text
24
Kiai, Richard M. "Nexus between Information and Communication Technology, Financial Intermediation, and Household Investment: A Review." Management and Economics Research Journal 03 (2017): 16. http://dx.doi.org/10.18639/merj.2017.03.456843.
Full textAbstract:
Financial inclusion has been recognized as a poverty reduction tool, and many economies have taken it up as a national agenda. To achieve the expected levels of financial inclusion, governments have worked with financial intermediaries to reach the expected target group, the unbanked poor. As per the financial intermediation theory, the role of financial intermediaries is to minimize the information asymmetry in the financial system. To enhance financial inclusion, many countries and financial institutions have embraced information and communication technology (ICT). ICT has been recognized as a tool that has worked greatly toward enhancing sharing of information at a low cost and that has thus helped in improving financial inclusion. Though many countries have achieved high levels of financial inclusion through ICT, the levels of poverty have not declined. It was thus important to establish the relationship between ICT, financial intermediation, and household investment. This study methodology was a review of the literature on financial inclusion, financial intermediation, ICT, and household investment. From this study, it was noted that ICT is helping in financial intermediation and thus more people can access financial services. Unfortunately, the levels of ICT capability among the poor are low, and in that case, the poor are not able to utilize financial services offered through ICT platforms to undertake household investment. This is the reason as to why, despite the high levels of financial inclusion, the poor still remain poor. This study recommends that the government should ensure that the levels of ICT among the populace are high. Financial institutions on the other hand should provide financial services with more user-friendly platforms.
25
Philippon, Thomas. "Has the US Finance Industry Become Less Efficient? On the Theory and Measurement of Financial Intermediation." American Economic Review 105, no. 4 (April 1, 2015): 1408–38. http://dx.doi.org/10.1257/aer.20120578.
Full textAbstract:
A quantitative investigation of financial intermediation in the United States over the past 130 years yields the following results: (i) the finance industry's share of gross domestic product (GDP) is high in the 1920s, low in the 1960s, and high again after 1980; (ii) most of these variations can be explained by corresponding changes in the quantity of intermediated assets (equity, household and corporate debt, liquidity); (iii) intermediation has constant returns to scale and an annual cost of 1.5–2 percent of intermediated assets; (iv) secular changes in the characteristics of firms and households are quantitatively important. (JEL D24, E44, G21, G32, N22)
26
Townsend, Robert M., and Sergio S. Urzua. "MEASURING THE IMPACT OF FINANCIAL INTERMEDIATION: LINKING CONTRACT THEORY TO ECONOMETRIC POLICY EVALUATION." Macroeconomic Dynamics 13, S2 (September 2009): 268–316. http://dx.doi.org/10.1017/s1365100509090178.
Full textAbstract:
We study the impact that financial intermediation can have on productivity through the alleviation of credit constraints in occupation choice and/or an improved allocation of risk, using both static and dynamic structural models as well as reduced-form OLS and IV regressions. Our goal in this paper is to bring these two strands of the literature together. Even though, under certain assumptions, IV regressions can accurately recover the true model-generated local average treatment effect, this is quantitatively different, in order of magnitude and even sign, from other policy impact parameters (e.g., ATE and TT). We also show that laying out clearly alternative models can guide the search for instruments. On the other hand, adding more margins of decision, that is, occupation choice and intermediation jointly, or adding more periods with promised utilities as key state variables, as in optimal multiperiod contracts, can cause the misinterpretation of IV as the causal effect of interest.
27
Muriithi, Perminus Kariuki, Tabitha Nasieku Nasieku, and Florence Memba Memba. "Investment Management and Financial Intermediation Efficiency of Deposit Taking Saccos’s in Kenya." International Journal of Finance 7, no. 4 (September 6, 2022): 1–10. http://dx.doi.org/10.47941/ijf.1025.
Full textAbstract:
Purpose: The purpose of the study will be to examine the influence of investment management on financial intermediation efficiency of deposit taking Savings and Credit Cooperative Societies in Kenya.
Methodology: This study adopted a descriptive survey research design. Target population of the study was 174 DT SACCOs which were in operations as December 2020. Census approach was used to select 174 DT SACCOs. The study relied on secondary data that was collected from annual financial statement of DT SACCOs. Data was analyzed using descriptive statistics (mean, standard deviation) and inferential statistics; regression analysis to examine the nature of the influence of investment management on financial intermediation efficiency.
Results: Results indicate that 57.38% of changes in financial intermediation efficiency of DT SACCOs was contributed by investment requirements. Further, there was a positive and significant influence of investment requirement on financial intermediation of DT SACCOs in Kenya (β = 0.071, p value < 0.05). The findings further revealed that financial performance as measured by profit before tax over total assets is positively related to Liquidity.
Unique Contribution to Theory, Policy and Practices: There is need for management of DT SACCOs to enhance compliance with Investment managements policy guidelines and procedures. This would be achieved through management of working capital items such as management of cash balances. Dependent on investment policies in place DT SACCOs management may adopt investment models that would enable ease conversion of investment in non-tangible assets into cash.
28
Greenwood, Jeremy, Juan M. Sanchez, and Cheng Wang. "Financing Development: The Role of Information Costs." American Economic Review 100, no. 4 (September 1, 2010): 1875–91. http://dx.doi.org/10.1257/aer.100.4.1875.
Full textAbstract:
To address how technological progress in financial intermediation affects the economy, a costly-state verification framework is embedded into the standard growth model. The framework has two novel ingredients. First, firms differ in the risk/return combinations that they offer. Second, the efficacy of monitoring depends upon the amount of resources invested in the activity. A financial theory of firm size results. Undeserving firms are over-financed, deserving ones under-funded. Technological advance in intermediation leads to more capital accumulation and a redirection of funds away from unproductive firms toward productive ones. With continued progress, the economy approaches its first-best equilibrium. (JEL G21, G31, O16, O33, O41)
29
Safitri, Julia, Ira Geraldina, and Muhamad Arief Affandi. "Management of Default Risk and Reserve Requirement." 13th GLOBAL CONFERENCE ON BUSINESS AND SOCIAL SCIENCES 13, no. 1 (June 16, 2022): 1. http://dx.doi.org/10.35609/gcbssproceeding.2022.1(23).
Full textAbstract:
This study aims to empirically examine the effect of credit risk on bank performance through capital adequacy (CAR) as a mediator. Where capital adequacy (CAR) is a new concept developed from the synthesis of monetary theory, financial intermediation theory, agency theory and bank risk management, as an effort to mediate the research gap between the influence of credit risk on bank performance. This study uses panel data with 35 companies as samples and uses a research period from 2013 to 2020. The analytical tool used in this research is PLS-SEM with WarpPLS 7.0 application. The results of the study explain the two rejected hypotheses, namely the effect of NPL on ROA and the effect of GWM on CAR, but the role of CAR as a mediator of the research gap in this study is the relationship between the effect of NPL on ROA and CAR as a partial mediator. Keywords: Reserve Requirment, bank risk management, return on asset, financial Intermediation Theory.
30
Khan, Aubhik. "FINANCIAL DEVELOPMENT AND ECONOMIC GROWTH." Macroeconomic Dynamics 5, no. 3 (June 2001): 413–33. http://dx.doi.org/10.1017/s1365100500020046.
Full textAbstract:
We develop a theory of financial development based on the costs associated with the provision of external finance. These costs arise through informational asymmetries between borrowers and lenders that are costly to resolve. When borrowing is limited, producers with access to financial intermediary loans obtain higher returns to investment than other producers. This creates incentives for others to undertake the technology adoption necessary to access investment loans. Over time, as increasing numbers of producers gain access to external finance, borrowers' net worth rises relative to debt. This reduces the costs of financial intermediation and raises the overall return on investment. The theory is consistent with recent evidence that financial development reduces the costs associated with the provision of external finance and increases the rate of economic growth. Furthermore, the theory predicts that financial development will raise the return on loans and reduce the spread between borrowing and lending rates.
31
Cui, Wei, and Sören Radde. "Search-based Endogenous Asset Liquidity and the Macroeconomy." Journal of the European Economic Association 18, no. 5 (August 28, 2019): 2221–69. http://dx.doi.org/10.1093/jeea/jvz037.
Full textAbstract:
Abstract We develop a search-theory of asset liquidity which gives rise to endogenous financing constraints on investment in an otherwise standard dynamic general equilibrium model. Asset liquidity describes the ease of issuance and resaleability of private financial claims, which is the outcome of a costly search-and-matching process for such claims implemented by financial intermediaries. Limited liquidity of private claims creates a role for liquid assets, such as government bonds, to ease financing constraints. We show that endogenising liquidity is essential to generate positive co-movement between asset liquidity and asset prices. When the cost of intermediating funds to entrepreneurs rises, investment and output fall whereas the hedging value of liquid assets increases, driving up liquidity premia. In the United States, such intermediation cost shocks can account for at least 37% of the variation in output, and more than 78% of the variation in liquidity premia.
32
Abdi, Abdikarin, Fatima Hussein, and Hanita Kadir. "EFFECT OF ELECTRONIC BANKING ON FINANCIAL INCLUSION AMONG COMMERCIAL BANKS IN SOMALIA." International Journal of Finance and Accounting 7, no. 2 (May 26, 2022): 43–54. http://dx.doi.org/10.47604/ijfa.1547.
Full textAbstract:
Purpose: The purpose of the study was to investigate the effect of automated teller machines and mobile banking on financial inclusion among commercial banks in Somalia.
Methodology: A descriptive survey design was adopted targeting 6 commercial banks in Somalia that had successfully rolled out electronic banking while the respondents covered the Banks staff, like managers and officers from each institution respectively and census was used. Primary data was collected on automated teller machines, mobile banking and customer deposits with the aid of the questionnaire. The analysis was conducted through the Statistical Packages for Social Sciences version 24 utilizing descriptive statistics (means and standard deviations) and inferential statistics (correlation and regression analysis) and presented through tables.
Findings: The study found out that automated teller machines banking and mobile banking are significant predictors of financial inclusion among commercial banks in Somalia. Thus, electronic banking is a significant enabler of financial inclusion of commercial banks.
Unique contributions to theory, practice and Policy: The study contributes to the extension of the views of financial intermediation theory and the diffusion of innovation theory. The study implies that the adoption of electronic banking as influenced by the diffusion of innovation theory allow financial institutions to effectively realize their financial intermediation role in the economy. The senior management team of commercial banks in Somalia should allocate more resources towards financial innovation and enhancement of the existing electronic banking channels and infrastructures. The policy makers at the Central Bank of Somalia need to develop progressive regulations and rules that would promote the adoption of financial innovation while boosting financial inclusion
33
K, Subair, and Soyebo Yusuf A. "Banks Intermediation and Stock Prices of Deposit Money Banks in Nigeria: VECM and Variance Decomposition Approach." Jinnah Business Review 8, no. 1 (January 1, 2020): 102–12. http://dx.doi.org/10.53369/hwxw1884.
Full textAbstract:
This study adopts the Vector Error Correction Model (VECM) and the variance decomposition techniques in testing the financial acceleration theory in banks intermediation. The bank intermediation variable is categorized into variable deposit mobilization, loan administration, delegated monitoring and risk diversification. Using cointegration analysis and quarterly secondary data between 2009 and 2016, this study assessed the short and long run influence of the categorized bank activities on their stock prices. The results indicate that banks intermediation exact influence on both the short and long run stock prices of DMBs in Nigeria as the ECM (-0.1420) result showed a significant speed of adjustment towards equilibrium while the overall model fitness showed that there is a long run causality running from banks intermediation measures and stock prices. Similarly, the result of the variance decomposition of stock prices shocks indicate that over time a significantly increasing proportion of stock prices is explained by loans and capital (delegated monitoring).
34
SMITH, STEPHEN D., DEBORAH WRIGHT GREGORY, and KATHLEEN A. WEISS. "A Note on Quantity versus Price Risk and the Theory of Financial Intermediation." Journal of Finance 42, no. 5 (December 1987): 1377–83. http://dx.doi.org/10.1111/j.1540-6261.1987.tb04372.x.
Full text
35
Bottazzi, Laura, Marco Da Rin, and Thomas Hellmann. "What is the role of legal systems in financial intermediation? Theory and evidence." Journal of Financial Intermediation 18, no. 4 (October 2009): 559–98. http://dx.doi.org/10.1016/j.jfi.2008.04.003.
Full text
36
Homolle, Susanne. "From the theory of financial intermediation to segment reporting: The case of German banks." Accounting Forum 27, no. 1 (March 2003): 60–83. http://dx.doi.org/10.1111/1467-6303.00096.
Full text
37
Sun, Hongfei. "MONEY, MARKETS, AND DYNAMIC CREDIT." Macroeconomic Dynamics 15, S1 (October 26, 2010): 42–61. http://dx.doi.org/10.1017/s1365100510000556.
Full textAbstract:
This paper presents an integrated theory of money and dynamic credit. I study financial intermediation when both the intermediary and individuals have private information. I show that money is essential to solving two-sided incentive problems under the dynamic credit arrangement. First, requiring settlement with money can induce market trades that generate information-revealing prices to discipline the intermediary. Second, it is optimal for the intermediary to issue money that can record its own history of being used in settlements, and to require that settlements be made with only money that has been returned to the intermediary every settlement period. This arrangement effectively reduces individuals' incentives to deviate and allows intermediation to achieve efficient allocations.
38
Barnett, William A., and Liting Su. "FINANCIAL FIRM PRODUCTION OF INSIDE MONETARY AND CREDIT CARD SERVICES: AN AGGREGATION THEORETIC APPROACH." Macroeconomic Dynamics 24, no. 1 (November 23, 2018): 130–60. http://dx.doi.org/10.1017/s1365100518000767.
Full textAbstract:
A monetary production model of financial firms is employed to investigate supply-side inside-money aggregation, augmented to include credit card transaction services. Inside money is a supply-side concept. Financial firms are conceived to produce monetary and credit card transaction services as outputs through financial intermediation. While credit cards provide transactions services, credit cards have never been included into measures of the money supply. The reason is accounting conventions, which do not permit adding liabilities to assets. However, index number theory measures service flows and is based on microeconomic aggregation theory, not accounting. We derive theory needed to measure the supply of the joint services of credit cards and inside money, needed to estimate the output supply function and to compute value added. The data needed for empirical implementation of our theory are available online from the Center for Financial Stability in New York City.
39
Francis, Brian M., and Kimberly Waithe. "Financial Liberalisation in Trinidad and Tobago." Global Economy Journal 13, no. 03n04 (December 2013): 371–90. http://dx.doi.org/10.1515/gej-2013-0034.
Full textAbstract:
This study analyses financial liberalisation in Trinidad and Tobago within the context of the McKinnon–Shaw model. The broad objective of this article is to empirically investigate the validity of both the McKinnon complementarity hypothesis and the Shaw debt intermediation model in relation to Trinidad and Tobago. These two models purport that persuasive government intervention and involvement in the financial system through the regulatory and supervisory network, particularly in controlling interest rates and allocation of credit, tend to distort financial markets. Therefore, by the removal of administrative controls on the assets portfolio and pricing behaviour of financial institutions, interest rates will rise to levels that will result not only in increased savings and loanable funds but also in a more efficient allocation of these funds, providing, in turn, stimuli for economic growth. Utilising the cointegration approach, the empirical analysis is conducted with annual data from 1970 to 2001. The empirical results support both the McKinnon complementarity hypothesis and the Shaw debt intermediation hypothesis in the long run. That is to say, real interest rates have a significant influence on savings in the long run. However, the results indicate that the real interest rate plays an insignificant role in the Error Correction Model in the short run for both the McKinnon and Shaw theories. Hence, this article provides empirical validity for the McKinnon–Shaw financial liberalisation theory in Trinidad and Tobago over the long run. Thus policy makers should take explicit account of this result in the formulation of financial policy. The sustainability of this policy, however, depends on the appropriateness of other fiscal, monetary incomes and exchange rate policies.
40
Chisasa, Joseph. "Rural credit markets in South Africa: A review of theory and empirical evidence." Corporate Ownership and Control 12, no. 1 (2014): 363–74. http://dx.doi.org/10.22495/cocv12i1c3p6.
Full textAbstract:
The demand for and supply of financial services in general and credit instruments in particular by rural South Africa still remains a confounding problem. The aim of this paper is to determine the status of rural credit markets in South Africa by reviewing theory and evidence from empirical studies. It is observed that financial markets in South Africa are fragmented between formal and informal markets. Formal financial markets generally serve urban and peri-urban areas with a thin distribution of services to people living in rural areas. Rather, informal financial institutions such as savings clubs (stockvels), co-operatives, moneylenders (mashonisas) and village banks are the more dominant providers of financial services. Commercial banks and other formal financial institutions cite high operating costs such as information gathering, monitoring and enforcement as some of the reasons for limited participation in rural financial markets. Such attitudes have been observed to retard entrepreneurial innovation and growth among small to medium size enterprises and smallholder farmers. Results of this analysis have policy implications in the areas of reduction of unemployment, poverty and sustainable economic growth in South Africa. Policies directed at increasing financial intermediation via formal financial institutions are recommended
41
Jalles, João Tovar. "A new theory of innovation and growth: the role of banking intermediation and corruption." Studies in Economics and Finance 33, no. 4 (October 3, 2016): 488–500. http://dx.doi.org/10.1108/sef-01-2016-0017.
Full textAbstract:
Purpose There has been an increased interest in the role of the financial sector and institutional quality in the development process. Design/methodology/approach This paper addresses the relationship between corruption and financial sector development by constructing a Schumpeterian endogenous growth model, allowing for the entry of competitive firms with an explicit role for politics and banking. Findings Assuming that technologically advanced firms are located in developed countries and backward firms in developing countries, the model in this study suggests that low corruption are more growth enhancing in the former group of countries. Better institutions stimulate entry by reducing banking screening costs and entry is more growth enhancing in sectors closer to the technological frontier. Research limitations/implications The model in this study is a partial equilibrium analysis and one should include a role for labour markets to address the household’s problem and enrich the model’s conclusions. Secondly, the model specification rests on the fact that the degree of corruption is correlated with the level of institutions. Even though this might be subject to some criticism, this is a common practice across the literature and so, it is clearly a matter of taste. Practical implications The main policy conclusion is that anti-corruption policy initiatives should prioritize corruption that distorts incentives with respect to productive investment that directly and negatively affects growth. Originality/value This paper addresses the relationship between corruption and financial sector development by constructing a Schumpeterian endogenous growth model, allowing for the entry of competitive firms with an explicit role for politics and banking.
42
Williamson, Stephen D. "Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach." American Economic Review 102, no. 6 (October 1, 2012): 2570–605. http://dx.doi.org/10.1257/aer.102.6.2570.
Full textAbstract:
A model of public and private liquidity integrates financial intermediation theory with a New Monetarist monetary framework. Non-passive fiscal policy and costs of operating a currency system imply that an optimal policy deviates from the Friedman rule. A liquidity trap can exist in equilibrium away from the Friedman rule, and there exists a permanent nonneutrality of money, driven by an illiquidity effect. Financial frictions can produce a financial-crisis phenomenon that can be mitigated by conventional open market operations working in an unconventional manner. Private asset purchases by the central bank are either irrelevant or they reallocate credit and redistribute income. (JEL E13, E44, E52, E62, G01)
43
Merton, Robert C. "On the Application of the Continuous-Time Theory of Finance to Financial Intermediation and Insurance." Geneva Papers on Risk and Insurance - Issues and Practice 14, no. 3 (July 1989): 225–61. http://dx.doi.org/10.1057/gpp.1989.21.
Full text
44
Masoub, Najeb. "How Stock Markets Development Affect Endogenous Growth Theory." International Journal of Finance & Banking Studies (2147-4486) 2, no. 4 (January 17, 2016): 13. http://dx.doi.org/10.20525/.v2i4.160.
Full textAbstract:
<p>This paper can be described as a significant exploratory study that will provide a significant contribution to knowledge to consider crucial issues which need to be barriers to understanding or a temptation/ requirement to judge some practices as ‘better’ than others for stock market development effective approach and implement successful stock market performance and economic growth. Recent analysis of the link between financial development and growth, gained from insights acquired as a result of using the technique of endogenous growth models, has illustrated that growth without exogenous technical progress and that growth rates could be related to technology, income distribution and institutional arrangements. This provides the theoretical background that empirical studies have lacked; illustrating that financial intermediation affects the level of economic growth. Resulting models have provided new impetus to empirical research of the effects of financial development. The birth of the new endogenous growth theory has facilitated the development of improved growth models where the long-term rate could be affected by a number of elements. These included technology, education and health policies in the process of economic development, capital accumulation, government policies and institutional activities in the role of financial development in economic growth.</p>
45
Kinateder, Markus, Hubert János Kiss, and Ágnes Pintér. "Would depositors pay to show that they do not withdraw? Theory and experiment." Experimental Economics 23, no. 3 (February 12, 2020): 873–94. http://dx.doi.org/10.1007/s10683-020-09646-y.
Full textAbstract:
Abstract In a Diamond–Dybvig type model of financial intermediation, we allow depositors to announce at a positive cost to subsequent depositors that they keep their funds deposited in the bank. Theoretically, the mere availability of public announcements (and not its use) ensures that no bank run is the unique equilibrium outcome. Multiple equilibria—including bank run—exist without such public announcements. We test the theoretical results in the lab and find a widespread use of announcements, which we interpret as an attempt to coordinate on the no bank run outcome. Withdrawal rates in general are lower in information sets that contain announcements.
46
Sigova, Mariia, Sergey Vasiliev, and Oleg Kliuchnikov. "Financial inclusions in social networks." SHS Web of Conferences 92 (2021): 06034. http://dx.doi.org/10.1051/shsconf/20219206034.
Full textAbstract:
Research background: The study suggests that social networks can offer all the same services and products as traditional financial intermediaries. Moreover, the scope and prospects for the inclusion of financial services in the social network system are not yet fully defined and not clear. Nevertheless, the modern largest social sites are constantly developing their financial functions. Moreover, they do it in their way and often differ from the traditional financial intermediation method: firstly, social networks offer all services in a “single window” - along with other information and in the course of social communications, that is, transfer the service of network users to omnichannel, including in this concept the whole complex of socio-communication and financial interactions. The problems of the interaction of social networks with economic networks are widely studied. Quite a lot of literature is devoted to the problem of innovation in the financial sector. There are also publications that contain literature reviews, conceptual and theoretical generalizations and discussions on this issue. No less abundant electronic finance literature – reviews, textbooks, numerous studies on specific issues and regional specificities of finance, as well as various web applications. Popular with researchers and the media are topics dedicated to social networks sites. Purpose of the article in the analysis of social networks is associated with new processes, the development of new provisions, clarification of terms, the development of new hypotheses and theoretical principles. Findings & Value added: The challenge facing researchers can be summarized as follows: the study of information and behavioral aspects of the interaction of two types of activities - financial intermediation and social networks, leading to new processes and the formation of new organizational forms and behavior. To this end, a purposeful search is carried out for concepts, models, and tools to determine the content and prospects of these processes and new approaches are being developed and proposed. Methods: At the first stage: (1) sociometric analysis based on graph theory, (2) concepts of interpersonal relationships, the behavior of various participants of groups and conditions for forming specific cliques in various groups, and (3) anthropological traditions, which were used to observe community members (including social networks), determine their structure, internal relations and conditions for their sustainability.
47
Bodie, Zvi. "Robert C. Merton and the Science of Finance." Annual Review of Financial Economics 11, no. 1 (December 26, 2019): 1–20. http://dx.doi.org/10.1146/annurev-financial-011019-040506.
Full textAbstract:
Starting with his 1970 doctoral dissertation and continuing to today, Robert C. Merton has revolutionized the theory and practice of finance. In 1997, Merton shared a Nobel Prize in Economics “for a new method to determine the value of derivatives.” His contributions to the science of finance, however, go far beyond that. In this article I describe Merton's main contributions. They include the following: 1. The introduction of continuous-time stochastic models (the Ito calculus) to the theory of household consumption and investment decisions. Merton's technique of dynamic hedging in continuous time provided a bridge between the theoretical complete-markets equilibrium model of Kenneth Arrow and the real world of personal financial planning and management. 2. The derivation of the multifactor Intertemporal Capital Asset Pricing Model (ICAPM). The ICAPM generalizes the single-factor CAPM and explains why that model might fail to properly account for observed market excess returns. It also provides a theory to identify potential forward-looking risk premia for use in factor-based investment strategies. It is therefore both a positive and normative theory. 3. The invention of Contingent Claims Analysis (CCA) as a generalization of option pricing theory. CCA applies the technique of dynamic replication to the valuation and risk management of a wide range of corporate and government liabilities. Merton's CCA model for the valuation and analysis of risky debt is known among scholars and practitioners alike as the Merton Model. 4. The development of financial engineering, which employs CCA to design and produce new financial products. Merton was the first to apply CCA to analyze government guaranty programs such as deposit insurance, and to suggest improvements in the way those programs are managed. He and his students have applied his insights at both the micro and macro policy levels. 5. And finally, the development of a theory of financial intermediation that explains and predicts how financial systems differ across countries and change over time. Merton has applied that theory, called functional and structural finance, to guide the design and regulation of financial systems at the levels of the firm, the industry, and the nation. He has also used it to propose reforms in pensions, sovereign wealth funds, and macrostabilization policy.
48
Amoah, Ciciana, and John N. Mungai. "Financial literacy training and micro insurance on the financial performance of SMEs in the Sekondi-Takoradi Metropolis, Ghana." International Journal of Research in Business and Social Science (2147- 4478) 9, no. 7 (December 12, 2020): 247–56. http://dx.doi.org/10.20525/ijrbs.v9i7.939.
Full textAbstract:
This research examines the effect of financial literacy training and micro insurance on the financial performance of Small and Medium Enterprises in the Sekondi-Takoradi Metropolis of Ghana. This study aims (i)to determine the effect of financial literacy training on the financial performance of SMEs, (ii) to establish the effect of microinsurance on the financial performance of SMEs; (iii) and to determine the moderating effect of government regulations on the relationship between financial literacy training, micro-insurance and the financial performance of SMEs. The study was based on the financial intermediation theory and Schumpeter’s theory of innovation. The study adopted an explanatory research design, using a sample size of 260 SMEs in the Sekondi-Takoradi metropolis, Ghana. A structured questionnaire was used to collect data on financial literacy training, micro insurance, financial performance, and government regulations from SME owners and microfinance institutions. Analysis of the data collected revealed that both financial literacy training and micro-insurance had a positive and significant effect on the financial performance of SMEs. The study recommends that the management of microfinance institutions that provide financial literacy training and micro-insurance should undertake a survey on the needs of SMEs and the specific challenges they face in accessing microfinance services.
49
Fontana, Giuseppe, Riccardo Realfonzo, and Marco Veronese Passarella. "Monetary economics after the global financial crisis: what has happened to the endogenous money theory?" European Journal of Economics and Economic Policies: Intervention 17, no. 3 (February 12, 2020): 339–55. http://dx.doi.org/10.4337/ejeep.2020.0056.
Full textAbstract:
The 2010s have witnessed a new shift in central banking and, partially at least, in monetary economics and macroeconomic modelling. It is a fact that the endogenous money theory has been gradually clawing back popularity at the expense of the classical theory of interest rates, the financial intermediation view of banks, the money-multiplier story and the quantity theory of money. However, the loanable funds theory and the view of banks as pure financial intermediaries (sometimes coupled with the money-multiplier story) are still sometimes invoked. In addition, the dynamic process of creation, circulation and destruction of money is usually neglected. The point is that money endogeneity is still regarded by many mainstream economists as a mere empirical fact, not a key feature of capitalist market-based economies to be properly explained by a logically consistent theory. By contrast, dissenting economists have further advanced the endogenous money view through: (a) a generalised theory of the endogenous process of money creation; (b) the increasing popularity of modern monetary theory in the public debate; and (c) the development of aggregative stock–flow consistent models and agent-based stock–flow consistent models as an alternative to dynamic stochastic general equilibrium models.
50
Titarenko, Galina, and Oleksandra Titarenko. "Institutional provision of financial mechanism of water use: theory and practice." Environmental Economics and Sustainable Development, no. 7(26) (2020): 85–91. http://dx.doi.org/10.37100/2616-7689/2020/7(26)/11.
Full textAbstract:
The statutes have the necessary positive and institutional benefits in the financial mechanism of water supply. The basic institute of financial security in the system of the water management complex of Ukraine is highlighted. The expediency of considering the institutional nature of financial support for the water management complex as a basis for optimization of economic systems has been proved. At the same time, it was noted that the market transformation of the Ukrainian Agrarian Union began without proper institutional support for the financial mechanism of the water management complex, which remained unchanged from the Soviet economic system, which does not meet the requirements of a market economy and needs a new revision. It is noted that the paradigm of institutionalism also provides an opportunity to determine the scenarios of financial support for the modernization of Ukraine. The necessity of formation of development institutes has been proved, among which in the research area are identified: institutes of property, management, financial intermediation, loan capital, rent of natural resources, entrepreneurship. It is determined that the development institute is an organizational and economic structure that facilitates the allocation of resources in favor of projects to realize the potential of economic growth. In the system of financial mechanism the main role is assigned to the Institute of Bank Lending. The basic problems of its functioning are revealed and the ways of their solution are determined. The main task of the National Bank of Ukraine is to expedite the problem of conducting currency swap operations, as they are able to solve the problem of shortage of national currency resources for the enterprises of Ukraine.