Littérature scientifique sur le sujet « Emerging Economies, Economic Growth, Financial Stability, Shadow Banking »

«The Group of Twenty» is an informal forum for international cooperation between the leading developed states, the largest developing countries and emerging market economies. The article explores the key strategic approaches and governance decisions related to the main directions of international macroeconomic and financial regulation elaborated during the Russian chairmanship in the G-20 (December 2012 – December 2013) which culminated in the St. Petersburg summit. The author makes attempt to estimate viability of discussed approaches and decisions against the background of the actual problems of global economy. The author pays special attention to the St. Petersburg summit’s approaches to the problems of providing favorable conditions for strong and sustainable economic growth and of addressing unemployment. The point is how to achieve an acceptable compromise between the purposes of fiscal and monetary policies, on the one part, and providing balanced state budgets, as well as price stability, on the other part. Also, the importance of a wide range of radical structural reforms is stressed. The author argues that Russia proposed to vital themes to discuss at G-20 summit: long-term financing for investment as a foundation for economic growth and improvement of public debt management practices. The article describes the principal provisions of the Declaration and the Action plan related to various aspects of the reconstruction of financial and monetary system, including: tackling tax avoidance; implementing the Basel-3 standards, dealing with the adequacy of the bank’s capital; ending «too big to fail» problem; reforming over-the-counter (OTC) derivatives market; reducing reliance on the credit rating agencies; addressing potential risks for financial stability posed by the shadow banking; increasing financial inclusion, financial education and strengthening financial consumer protection; eliminating the international misbalances through broad based rebalancing of global demand; resisting of all forms of protectionism and promoting liberalization of global trade and investment; moving towards exchange rate flexibility to avoid persistent exchange rate misalignment; transforming the International Monetary Fund and Financial Stability Board. The author points to significant achievements of G-20 as a coordinating body for economic crisis management and, at the same time, discloses obstacles complicating its activities and development.

This paper aims to understand the development of banking activities in emerging market economies not only for evaluating the impact of them for encouraging emerging economies’ growth, but also establish the overall effect of these processes to the global financial market. The object of study is the banking activities of emerging market economies, and the subject is the impact of banking activities development on the economic growth of emerging market economies. The author substantiated the thesis that for emerging market economies’ financial development should be examined in terms of banking stability, competition, and economic growth. The author also reveals specific characteristics that distinguish banking activities of emerging market economies from developed countries by evaluation of bank performance using criteria of stability, profitability, and efficiency.

Shadow banking has become an important part of many financial systems despite having contributed to the financial crisis of 2008/2009. This study analyzes the relationship between shadow banking and economic growth using a panel of 28 developed and emerging economies. We employ panel feasible GLS technique and find a positive association between shadow banking and economic growth in the long-run. Further, we test for the Finance–Growth relationship using Granger causality tests and find a bi-directional relationship between shadow banking and economic growth. Stock market development and bank credit also have positive bi-directional relationships with economic growth. Our findings emphasize the role of financial innovation in enhancing economic performance given a stable regulatory environment. We suggest regular review of macro-prudential policy to carter for new financial activities and also to allow for development of new financing techniques.

The aim of macroprudential policy is to ensure financial stability by avoiding the outbreak of banking crises, which have a dangerous effect on the economy. Is macroprudential policy effective in the face of banking crises and systemic risks? The macroprudential policy has received significant interest from policy-makers and researchers. A few developing countries were using macroprudential policy tools well before the 2008 financial crisis, but significant progress has been made thereafter in both emerging and industrialized economies to put in place specific institutional settings for macroprudential policy. The fundamental objective of macroprudential policy is to maintain the stability of the financial system by making it more resistant and preventing the risk build-up. The objective of this paper is to analyze the important role of macroprudential policy in ensuring overall financial stability. Since the financial crisis of 2008, macroprudential policy has been increasingly used across economies. These measures aim at smoothing financial cycles and thereby mitigating the impact on the real economy, thereby allowing monetary policy to focus on price stability and promote growth and full employment. Macroprudential policy instruments fall into two categories, depending on their purpose, namely, to prevent procyclicality or to enhance the resilience and soundness of the financial system against shocks. The first category of instruments is used to stop bubbles from forming and smooth cycles, i.e. to force the debt-equity of economic operators on an income basis to prevent unsustainable credit bubbles, or to require dynamic loss provisioning rules. The second category of macro-prudential policy is to improve the resilience to shocks, such as capital surcharges for systemic institutions or the requirement to hold liquid assets to cope with market panics, and to make the financial system less complex. Keywords: macroprudential policy, financial stability, tools and measures, systemic risks.

Efficiency and stability of the banking sector is a pre-requisite to economic growth of the nation. The banking industry has undergone phenomenal transformation over the past six decades since independence. Banks have shifted from traditional methods of banking to newer modern systems. This has led to impressive growth of commercial banks in India. In the year 2007, financial crisis loomed over the global economy with severe adverse effects on many western economies. In comparison, India stood poised as the fastest growing emerging market economy in the face of turmoil and pessimism. Although India stood strong, many banks started witnessing a change in their growth path during the post global financial crisis period. The public sector banks witnessed major setbacks with decline in their financial performance. In this light, the objective of the study is defined; so as to determine the role of efficiency and profitability indicators on the performance of bank groups. The findings of the study reveal that foreign banks have shown outstanding profitability performance and excellent management efficiency. It is the private sector banks that have outperformed the competing bank groups in terms of earning efficiency. Public sector banks have lagged behind with deteriorating profitability and efficiencies during the analysis period.

Purpose The purpose of this paper is to review the continued development of the “shadow banking” market in the USA, namely, lending to the private middle market, defined as financings of $5-100m to non-public, unrated operating entities or pools of assets with not more than $50m in earnings before interest, taxes, depreciation and amortization. Design/methodology/approach The analysis includes a continued review of an innovative segment of the financial markets and primary evidence from direct participation in four actual cases of private, non-bank lending between 2013 and 2015 and theoretical observations around that data. Findings Although there have been considerable challenges, historically, in providing credit for small and mid-sized businesses in the USA, the authors show further evidence that private middle market capital is growing (post credit crisis) at a dramatic pace, in part because of excessive constraints placed on the regulated depositary institutions. The authors also explain the nature of the shadow banking innovation and how it is intrinsically linked to “arbitraging” often excessively restrictive banking regulation. The growing US shadow banking market, while providing an important service to middle market companies, may pose a new systemic risk post 2007-2008 credit crisis in the USA. Research limitations/implications Any generalization is limited because of the difficulty in extrapolating from a small number of specific case studies and the absence of adequate survey data for the US capital markets and the limited examples examined. Practical implications This research calls for additional case studies, including participant observation research that offers a unique close-up view of financial behavior that is often beyond the view of regulators and the public. Data obtained may be useful in providing a deeper, more timely understanding of credit market behavior and contribute to efforts at formal financial modeling as well as the development of practical regulatory regimes. Social implications The shadow credit market is a key source of funding for the global financial system, thus contributing to job creation and economic growth. The authors demonstrate the value of financial innovations and show that shadow credit fills a void left by depository financial institutions, shifting much of the risk from the public to investors. This research increases transparency in the operation of this market, which is extremely important for the industry, the government and the public. The authors offer a modest attempt at understanding credit behavior to avoid a repeat of the 2007/2008 financial crisis. Originality/value Direct participation is unique to the firms studied. Value is in developing a general framework to analyze an emerging credit market in advanced economies.

Purpose The paper aims to provide needed quantitative assessments of the impact of the withdrawal of correspondent banking to small emerging economies. It serves to identify the extent to which global anti-money laundering and combatting the financing of terrorism (AML/CFT) standards have influenced global banks’ decision to withdraw correspondent banking from some jurisdictions and the subsequent economic spillover effects on other non-bank financial entities. Design/methodology/approach Separate semi-structured surveys are issued to banks and money services businesses in Jamaica. Analysis of the responses identify the initial impact of de-risking on banks and the subsequent spillover effect on the other aspects of the financial system. Findings Results show significant spillover effects on money services businesses in their ability to transact in foreign currency with local commercial banks. Further, the scale of this impact is greater and costlier for smaller entities. Research limitations/implications The economic consequences of the direct and indirect impact of correspondent bank de-risking are increased concentration risks and the potential expansion of shadow financial activity. Practical implications Tighter AML/CFT standards coupled with action of over-compliance has created unintended consequences for small developing countries across the globe. In Jamaica, commercial banks have either lost correspondent relationships or have had restrictions placed on the types of services available. It creates risks to economic growth and development through the hindrance of access to international financial markets for payments, trade and commerce. Originality/value This study is the first among research on the issue of correspondent bank de-risking to provide quantitative assessments of the impact on local financial systems.

The world economy entered the third decade of this century with uncertainties and challenges of COVID-19 pandemic before it had fully recovered from the lingering aftereffects of the financial crisis. The financial crisis ended a period of overall global economic growth and price stability during which globalization and its principles of trade, economic and political liberalization were widely held as the emerging international economic and political order. In domestic economy, most countries favored supply-side economics and monetary policy in a free-market setting. This paper appeals to economic logic and empirical evidence to critically study external and internal economic processes and policies particularly of major world economies to identify what caused the unanticipated onset of the banking crash and why the ensuing persistent downturn defied remedial measures. It concludes that major trading powers departed from their declared commitment to free trade and its basic rules with no effective institutional safeguards and deterrents. Internally, absence of efficient monitoring and supervision of workings of nominal and real sectors allowed anomalies to develop within the market economy unnoticed. As regards inefficacy of policies against several years of stagnation, the paper discusses asymmetric performance of monetary tools and problematic application of fiscal policy to suggest revisiting supply-side and Keynesian approaches against their past performance and forge an eclectic kit of analytical and policy tools alongside the necessary organizational reforms.

Purpose This paper aims to examine the relationship between monetary policy and market interest rates. This paper examines the efficiency of interest rate channel used in monetary regulation as well as implementation of monetary policy under low interest rates. This paper examines and reviews the scientific literature published over the past 30 years to determine primary research areas, to summarize their results and to identify appropriate measures of monetary policy to be used in practice in changing economic environment. Design/methodology/approach This paper reviews 94 studies focused on the relationship between monetary policy and market interest rates in terms of meeting the goals of macroeconomic regulation. The articles are selected on the basis of Scopus citation and bibliometric analysis. A major feature of this paper is the use of text analysis (data preparation, frequency of terms and collocations use, examination of relationships between terms, use of principal component analysis to determine research thematic areas). Using the method of principal component analysis while studying abstracts this paper reveals thematic areas of the research. Thus, the conducted text analysis provides unbiased results. Findings First, this paper examines the whole complex of relationships between monetary policy of central banks and market interest rates. Second, this research reviews a wide range of literature including recent studies focused on specific features of monetary policy under low and negative rates. Third, this study identifies and summarizes the thematic areas of all the researches using text analysis (transmission mechanism of monetary policy, efficiency of zero interest rate policy, monetary policy and term structure of interest rates, monetary policy and interest rate risk of banks, monetary policy of central banks and financial stability). Finally, this paper presents the most important findings of the studied articles related to the current situation and trends on the financial market as well as further research opportunities. This paper finds the principal results of studies on significant issues of monetary policy in terms of its efficiency under low interest rates, influence of its instruments on term structure of interest rates and role of banking sector in implementation of transmission mechanism of monetary policy. Research limitations/implications The limitation of the review is examining articles for the study period of 30 years. Practical implications Central banks of emerging economies should apply the instruments and results of the countries' monetary policies reviewed in this paper. Using text analysis this paper reveals the main thematic areas and summarizes findings of the articles under study. The analysis allows presenting the main ideas related to current economic situation. Social implications The findings are of great value for adjusting the monetary policy of central banks. Also, these are important for people because these show the significant role of monetary policy for the economic growth. Originality/value Using text analysis this paper reveals the main thematic areas (transmission mechanism of monetary policy, efficiency of zero interest rate policy, monetary policy and term structure of interest rates, monetary policy and interest rate risk of banks, monetary policy of central banks and financial stability) and summarizes findings of the articles under study. The analysis allows defining the current ideas relevant to the monetary policy of developing countries. It is important for central banks because it examines the monetary policy problems and proposes optimal solutions.

Ashoka Mody of International Monetary Fund reviews “Growth with Financial Stability: Central Banking in an Emerging Market” by Rakesh Mohan. The EconLit abstract of the reviewed work begins: Explores the evolving roles of fiscal, monetary, and financial policies in India and their interaction and adaptation since India's independence, focusing on reforms since the early 1990s. Discusses the growth record of the Indian economy -- a story of sustained savings and investment; sustaining growth with stability -- the role of fiscal and monetary policies; innovation and growth -- role of the financial sector; development of banking and financial markets in India -- fostering growth while containing risk; development of the Indian debt market; financial inclusion in India; communication in central banks -- a perspective; volatile capital flows and Indian monetary policy; liberalization and regulation of capital flows -- lessons for emerging market economies; the global financial crisis -- causes, impact, policy responses, and lessons; emerging contours of financial regulation -- challenges and dynamics; and economic reforms in India --where we are and where we go. Mohan is Professor in the Practice of International Economics and Finance with the School of Management and Senior Fellow at the Jackson Institute of Global Affairs at Yale University. Index.

This thesis contains three studies on economic growth and financial stability in emerging economies; economic growth has been at the center of discussion in any democratic society. The quest by mankind to improve the material standards of living a notion spawned by the 18th century's Enlightenment spread through Europe and North America. However, the demonstrable driver of economic progress is competition and protection of private property. Individuals do not exert the effort to accumulate the capital necessary for economic growth unless they can own it. The first study examines the existing literature on economic growth models and uses a survey method to discuss the recent developments from different perspectives. During the second half of the twentieth-century economists have built newer models of economic growth that consider policy influences of growth and divergent outcomes among countries. These models address issues concerning economic growth, the operation of financial markets, trade policy, government expenditures, and taxation. In this essay we have revisited the interdependence of political and economic institutions, taking the neoclassical growth model of [Solow1956] as a point of departure, which maintains that capital accumulation, population growth and technological progress explains long run economic growth. We discuss the evolution of the neoclassical school of economics in a historical context, and the role of various institutions in engendering economic growth. Subsequently, the role of government spending, political stability, property rights and special interest groups (SIG's) that affect economic growth have been discussed and how these institutions can explain different countries to grow at divergent rates and achieve various levels of wealth. The second study presents an analysis of the Chinese economic growth model post-2008 and more notably the effect of 4 Trillion Yuan stimulus in the aftermath of the Global Financial Crisis. This study looks at the Chinese financial system and the credit creation mechanism in the economy; the data shows that post-2008 there has been a sudden increase in credit outside the formal banking system. We specifically focus on the off-balance sheet Entrusted Loans provided by non-bank entities via the shadow banking system. We explain the entrusted loan mechanism and the rapid increase in Non-bank credit. Our stress tests results for the 15 major banks in China indicate that the banks remain well capitalized in the case of an idiosyncratic shock, notably the SIFI's but can experience contagion through the Interbank funding market via smaller banks. The third study sheds light on the relationship between the ratio of equity prices and current earnings per share, the Price Earning (P/E) ratio. The P/E ratio is widely considered to be an adequate gauge of under/overvaluation of a corporation?s stock. Arguably, a more reliable indicator, the Cyclically-Adjusted Price Earning ratio or CAPE, can be obtained by replacing current earnings with a measure of permanent earnings i.e. the profits that a corporation can earn, on average, over the medium to long run. In this study, we aim to understand the cross-sectional aspects of the dynamics of the valuation metrics across global stock markets including both developed and emerging markets. We use a time varying DCC model to exploit the dynamics of correlations, by introducing the notion of value spread between CAPE and the respective Market Index from 2002 to 2014 for 34 countries. We find that the Value spread is statistically significant during the 2008 crisis for asset allocation. The signal can be utilized for better asset allocation as it allows one to interpret the common movements in the stock market for under/overvaluation trends. These estimates clearly indicate periods of misevaluation in our sample. Furthermore, our simulations suggest that the model can provide early warning signs for asset mispricing in real time on a global scale and formation of asset bubbles.
This thesis contains three studies on economic growth and financial stability in emerging economies; economic growth has been at the center of discussion in any democratic society. The quest by mankind to improve the material standards of living a notion spawned by the 18th century's Enlightenment spread through Europe and North America. However, the demonstrable driver of economic progress is competition and protection of private property. Individuals do not exert the effort to accumulate the capital necessary for economic growth unless they can own it. The first study examines the existing literature on economic growth models and uses a survey method to discuss the recent developments from different perspectives. During the second half of the twentieth-century economists have built newer models of economic growth that consider policy influences of growth and divergent outcomes among countries. These models address issues concerning economic growth, the operation of financial markets, trade policy, government expenditures, and taxation. In this essay we have revisited the interdependence of political and economic institutions, taking the neoclassical growth model of [Solow1956] as a point of departure, which maintains that capital accumulation, population growth and technological progress explains long run economic growth. We discuss the evolution of the neoclassical school of economics in a historical context, and the role of various institutions in engendering economic growth. Subsequently, the role of government spending, political stability, property rights and special interest groups (SIG's) that affect economic growth have been discussed and how these institutions can explain different countries to grow at divergent rates and achieve various levels of wealth. The second study presents an analysis of the Chinese economic growth model post-2008 and more notably the effect of 4 Trillion Yuan stimulus in the aftermath of the Global Financial Crisis. This study looks at the Chinese financial system and the credit creation mechanism in the economy; the data shows that post-2008 there has been a sudden increase in credit outside the formal banking system. We specifically focus on the off-balance sheet Entrusted Loans provided by non-bank entities via the shadow banking system. We explain the entrusted loan mechanism and the rapid increase in Non-bank credit. Our stress tests results for the 15 major banks in China indicate that the banks remain well capitalized in the case of an idiosyncratic shock, notably the SIFI's but can experience contagion through the Interbank funding market via smaller banks. The third study sheds light on the relationship between the ratio of equity prices and current earnings per share, the Price Earning (P/E) ratio. The P/E ratio is widely considered to be an adequate gauge of under/overvaluation of a corporation?s stock. Arguably, a more reliable indicator, the Cyclically-Adjusted Price Earning ratio or CAPE, can be obtained by replacing current earnings with a measure of permanent earnings i.e. the profits that a corporation can earn, on average, over the medium to long run. In this study, we aim to understand the cross-sectional aspects of the dynamics of the valuation metrics across global stock markets including both developed and emerging markets. We use a time varying DCC model to exploit the dynamics of correlations, by introducing the notion of value spread between CAPE and the respective Market Index from 2002 to 2014 for 34 countries. We find that the Value spread is statistically significant during the 2008 crisis for asset allocation. The signal can be utilized for better asset allocation as it allows one to interpret the common movements in the stock market for under/overvaluation trends. These estimates clearly indicate periods of misevaluation in our sample. Furthermore, our simulations suggest that the model can provide early warning signs for asset mispricing in real time on a global scale and formation of asset bubbles.

Both monetary and fiscal policies have a crucial role in the financial markets of the countries. In this framework, policies can be used for mainly two different purposes, which are contractionary and expansionary policies. Hence, it can be said that monetary policies play a key role especially for the emerging economies. The main reason is that these are the economies that aim to be a developed economy. In order to reach this objective, they aim to make investment to obtain sustainable economic growth. Similar to this aspect, this chapter aims to identify different monetary policy operations of the central banks. Thus, various monetary policy instruments are explained. After this issue, necessary information is given related to the central banking operations of E7 economies. As a result, it is defined that central banks of these countries play an active role especially during the recession period.

From this edition, the Financial Stability Report will have fewer pages with some changes in its structure. The purpose of this change is to present the most relevant facts of the financial system and their implications on the financial stability. This allows displaying the analysis more concisely and clearly, as it will focus on describing the evolution of the variables that have the greatest impact on the performance of the financial system, for estimating then the effect of a possible materialization of these risks on the financial health of the institutions. The changing dynamics of the risks faced by the financial system implies that the content of the Report adopts this new structure; therefore, some analyses and series that were regularly included will not necessarily be in each issue. However, the statistical annex that accompanies the publication of the Report will continue to present the series that were traditionally included, regardless of whether or not they are part of the content of the Report. In this way we expect to contribute in a more comprehensive way to the study and analysis of the stability of the Colombian financial system. Executive Summary During the first half of 2015, the main advanced economies showed a slow recovery on their growth, while emerging economies continued with their slowdown trend. Domestic demand in the United States allowed for stabilization on its average growth for the first half of the year, while other developed economies such as the United Kingdom, the euro zone, and Japan showed a more gradual recovery. On the other hand, the Chinese economy exhibited the lowest growth rate in five years, which has resulted in lower global dynamism. This has led to a fall in prices of the main export goods of some Latin American economies, especially oil, whose price has also responded to a larger global supply. The decrease in the terms of trade of the Latin American economies has had an impact on national income, domestic demand, and growth. This scenario has been reflected in increases in sovereign risk spreads, devaluations of stock indices, and depreciation of the exchange rates of most countries in the region. For Colombia, the fall in oil prices has also led to a decline in the terms of trade, resulting in pressure on the dynamics of national income. Additionally, the lower demand for exports helped to widen the current account deficit. This affected the prospects and economic growth of the country during the first half of 2015. This economic context could have an impact on the payment capacity of debtors and on the valuation of investments, affecting the soundness of the financial system. However, the results of the analysis featured in this edition of the Report show that, facing an adverse scenario, the vulnerability of the financial system in terms of solvency and liquidity is low. The analysis of the current situation of credit institutions (CI) shows that growth of the gross loan portfolio remained relatively stable, as well as the loan portfolio quality indicators, except for microcredit, which showed a decrease in these indicators. Regarding liabilities, traditional sources of funding have lost market share versus non-traditional ones (bonds, money market operations and in the interbank market), but still represent more than 70%. Moreover, the solvency indicator remained relatively stable. As for non-banking financial institutions (NBFI), the slowdown observed during the first six months of 2015 in the real annual growth of the assets total, both in the proprietary and third party position, stands out. The analysis of the main debtors of the financial system shows that indebtedness of the private corporate sector has increased in the last year, mostly driven by an increase in the debt balance with domestic and foreign financial institutions. However, the increase in this latter source of funding has been influenced by the depreciation of the Colombian peso vis-à-vis the US dollar since mid-2014. The financial indicators reflected a favorable behavior with respect to the historical average, except for the profitability indicators; although they were below the average, they have shown improvement in the last year. By economic sector, it is noted that the firms focused on farming, mining and transportation activities recorded the highest levels of risk perception by credit institutions, and the largest increases in default levels with respect to those observed in December 2014. Meanwhile, households have shown an increase in the financial burden, mainly due to growth in the consumer loan portfolio, in which the modalities of credit card, payroll deductible loan, revolving and vehicle loan are those that have reported greater increases in risk indicators. On the side of investments that could be affected by the devaluation in the portfolio of credit institutions and non-banking financial institutions (NBFI), the largest share of public debt securities, variable-yield securities and domestic private debt securities is highlighted. The value of these portfolios fell between February and August 2015, driven by the devaluation in the market of these investments throughout the year. Furthermore, the analysis of the liquidity risk indicator (LRI) shows that all intermediaries showed adequate levels and exhibit a stable behavior. Likewise, the fragility analysis of the financial system associated with the increase in the use of non-traditional funding sources does not evidence a greater exposure to liquidity risk. Stress tests assess the impact of the possible joint materialization of credit and market risks, and reveal that neither the aggregate solvency indicator, nor the liquidity risk indicator (LRI) of the system would be below the established legal limits. The entities that result more individually affected have a low share in the total assets of the credit institutions; therefore, a risk to the financial system as a whole is not observed. José Darío Uribe Governor