Meta Analyses and Controversy About Financialization, Growth and Stability: A look from post-transition countries of last decade (original) (raw)

Controversy of Economic Growth and Financial Stability

2019

In the recent theory of economic growth, there are multiple explanations for the "downward trend of economic growth", which has already been happening during the past decade in developed and emerging markets. Almost all economists have avoided researching the "hypothesis of the world without growth", dealing with Krugman's rhetoric of "secular stagnation is probable" or thinking about Koehn's rhetoric "get rid of dependence on growth”. The cult of growth is embedded in the economic, political and social heads so deeply, that for each of them growth is an imperative of life and death. In this pape, we examine the theses and controversies of economic growth and financial stability, and in this context, the development of economic theory as a whole.

Financial Stability and Growth in Emerging Economies The Role of the Financial Sector Edited by

2016

FONDAD is an independent policy research centre and forum for international discussion established in the Netherlands. Supported by a worldwide network of experts, it provides policy-oriented research on a range of North-South problems, with particular emphasis on international financial issues. Through research, seminars and publications, FONDAD aims to provide factual background information and practical strategies for policymakers and other interested groups in industrial, developing and transition countries.

The Finance-Growth Nexus: Market Economies vs. Transition Countries

SSRN Electronic Journal, 2000

Die EI Working Papers sind Diskussionspapiere von MitarbeiterInnen und Gästen des Europainstitutes an der Wirtschaftsuniversität Wien, die dazu dienen sollen, neue Forschungsergebnisse im Fachkreis zur Diskussion zu stellen. Die Working Papers geben nicht notwendigerweise die offizielle Meinung des Instituts wieder. Sie sind gegen einen Unkostenbeitrag von € 7,20 am Institut erhältlich. Kommentare sind an die jeweiligen AutorInnen zu richten. Medieninhaber, Eigentümer Herausgeber und Verleger: Europainstitut der Wirtschaftsuniversität Wien, Abstract Applying a growth accounting framework and a wide range of static and dynamic panel data estimators on a panel covering 22 market economies and 11 transition countries over 1990-2001,

FINANCIALIZATION IN TRANSITION: A CRITICAL ANALYSIS FROM THE PERSPECTIVE OF INTERNATIONAL POLITICAL ECONOMY

The paper presented below intends to investigate how structural reforms applied in the transition processes of the centrally planned economies from Central and Eastern Europe into to market economies promoted their financialization. According to Epstein (2002) financialization " refers to the increasing importance of financial markets, financial motives, financial institutions and financial elites in the operations of the economy and its governing institutions, both at the national and international levels ". Its origin dates back to the reforms carried out in several countries during the last years of the 1970 decade, beginning a process of profound structural change. Lapavitsas (2009), states that the expansion of the financial instruments, more sophisticated means of communication and the progress in global economic integration provided the opportunity to agents engaged in the financial sector to get high returns made in the process of circulation of capital, to the detriment of other sectors. Thus, financialization represents a structural shift in the global economy in which the financial sector gains a greater influence on the overall economy. In addition, it is argued that this process of financialization of the CEE should be analyzed in the context of global-historical trends and that external agents played a key role in the determination of the direction and policies applied.

The Character of the State in Financial Development and Economic Growth

SSRN Electronic Journal, 2011

This study involved an analysis of how the character of a state inadvertently defines the trajectory of financial development of the state and its resultant impact/causality on economic growth. The guiding theme here is that the finance growth theory (Schumpeter 1911, Goldsmith 1969) has its fundamental root in the demographics of western economies with proven functional and stable political and social institutions. The direct applicability of this theory to the explanation of financial and macroeconomic phenomena in developing economies with a unique set of distinct characters may prove erroneous.

Financial Development, Growth, and Crisis: Is There a Trade-Off? (with Norman Loayza and Amine Ouazad), Handbook of Finance and Development, 2018

Handbook of Finance and Development, 2018

This paper reviews the evolving literature that links financial development, financial crises, and economic growth in the past 20 years. The initial disconnect—with one literature focusing on the effect of financial deepening on long-run growth and another studying its impact on volatility and crisis—has given way to a more nuanced approach that analyzes the two phenomena in an integrated framework. The main finding of this literature is that financial deepening leads to a trade-off between higher economic growth and higher crisis risk; and its main conclusion is that, for at least middle-income countries, the positive growth effects outweigh the negative crisis risk impact. This balanced view has been revisited recently for advanced economies, where an emerging and controversial literature supports the notion of "too much finance," suggesting that there might be a threshold beyond which financial depth becomes detrimental for economic growth by crowding out other productive activities and misallocating resources. Nevertheless, the growth/crisis trade-off is alive and strong for a large share of the world economy. Recognizing the intrinsic trade-offs of financial development can provide a useful framework to design policies targeting financial deepening, diversity, and inclusion. In particular, acknowledging the trade-offs can highlight the need for complementary policies to mitigate the risks, from financial macroprudential policies to monetary policy frameworks that monitor the growth of credit and asset prices.

The Role of Finance in Economic Development – Benefits, Risks, and Politics

Theoretical and empirical research has shown that a sound and effective financial system is critical for economic development and growth. The financial system, however, is also subject to boom and bust cycles and fragility, with negative repercussions for the real economy. Further, the political structure of societies, often pre-determined by historic experience, is critical for the structure and development of the financial system. This paper is a critical survey of three related strands of literature -the finance and growth literature, the literature on financial fragility, and the politics and finance literature. literature that has explored the causes and socioeconomic costs of financial fragility, including systemic banking crises. Historic analyses and case studies have given way to more systemic cross-country explorations of idiosyncratic and systemic banking distress and their determinants.