Metrics

  • citations in SCIndeks: [1]
  • citations in CrossRef:[1]
  • citations in Google Scholar:[]
  • visits in previous 30 days:6
  • full-text downloads in 30 days:4

Contents

article: 6 from 10  
Back back to result list
2016, vol. 18, iss. 3, pp. 247-260
Interaction between financial intermediation efficiency and economic growth
University of Kragujevac, Faculty of Economy

emailmgrbic@kg.ac.rs
Abstract
Financial intermediaries have the key role in making a connection between savings and investments. Given the fact that an efficient transfer of savings into investments is made more difficult by transaction and information costs, financial intermediaries are specialized in minimizing the said costs per unit of invested capital. They are also trained to identify productive and innovative investment endeavors which contribute to the growth of real output. Real output growth is the basis for increasing the financial potential, which creates the basis for the development of financial intermediaries. In connection with that, apart from the analysis of the relevant factors making the process of the mobilization and transfer of savings more difficult, the theoretical models that put an emphasis on the relationship between the efficiency of financial intermediation and economic growth are discussed in the paper. The research results are indicative of the fact that the improvement in financial intermediaries' business doing enables faster economic growth. Simultaneously, the growth of the economic activity increases the scope of the business operations conducted by financial intermediaries. Thanks to the effects of the economies of scale that contribute to a reduction in transaction and information costs, the efficiency of financial intermediations grows.
References
Becsi, Z., Wang, P. (1997) Financial development and growth. Economic Review, 46-62; 4
Berger, A.N., Hannan, T.H. (1998) The Efficiency Cost of Market Power in the Banking Industry: A Test of the “Quiet Life” and Related Hypotheses. Review of Economics and Statistics, 80(3): 454-465
Berthelemy, J.C., Varoudakis, A. (1996) Economic Growth, Convergence Clubs, and the Role of Financial Development. Oxford Economic Papers, 48(2): 300-328
Bogdan, Ž. (2010) Pregled istraživanja o vezi između razvijenosti financijskog sustava i gospodarskog rasta. Zbornik Ekonomskog fakulteta u Zagrebu, 8(1); 137-154
Bolton, P., Freixas, X. (2000) Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information. Journal of Political Economy, 108(2): 324-351
Boyd, J.H., Prescott, E.C. (1986) Financial intermediary-coalitions. Journal of Economic Theory, 38(2): 211-232
Chou, Y.K., Chin, M.S. (2001) Human capital, financial innovations and growth: A theoretical approach. in: Working Paper, Department of Economics, The University of Melbourne, No 826, Retrieved October 29, 2016, from https: //ideas. epec. org/p/mlb/wpaper/826. html
Chou, Y.K. (2007) Modeling Financial Innovation and Economic Growth: Why the Financial Sector Matters to the Real Economy. Journal of Economic Education, 38(1): 78-90
de Haas, R. (2001) Financial development and economic growth in transition economies: A survey of the theoretical and empirical literature. in: Research Series Supervision 35, Netherlands Central Bank, December 03, 2016, https//ideas.repec.org/p/dnb/ressup/35.html
Dhaliwal, D.S., Li, O.Z., Tsang, A., Yang, Y.G. (2011) Voluntary Nonfinancial Disclosure and the Cost of Equity Capital: The Initiation of Corporate Social Responsibility Reporting. Accounting Review, 86(1): 59-100
Dolar, V., Meh, C. (2002) Financial structure and economic growth: A non-technical survey. in: Working Paper 24, Bank of Canada, 2002
Folawewo, A.O., Tennant, D. (2008) Determinants and interest rate spreads in Sub-Saharan African countries: A dynamic panel analysis. in: 13th Annual African Econometrics Society Conference, Pretoria, Republic of South Africa, July, 2016, October 19; http://www.africametrics.org/documents/conference08/day2/session6/folawewo_tennant.pdf
Gelos, R. (2006) Banking spreads in Latin America. IMF Working Paper, 06/44, October 29, 2016, https://www.imf.org/external/pubs/ft/wp/2006/wp0644.pdf
Greenwood, J., Sanchez, J.M., Wang, C. (2010) Financing Development: The Role of Information Costs. American Economic Review, 100(4): 1875-1891
ikhide sylvanus i. (2008) Measuring the operational efficiency of commercial banks in Namibia. South African Journal of Economics, 76(4): 586-595
Karapetyan, A., Stacescu, B. (2012) Collateral and repeated lending. in: Working Paper 18, October 25, 2016, http://www.norges-bank.no/pages/92255/norges_bank_working_paper_2012_18.pdf
Laeven, L., Levine, R., Michalopoulos, S. (2015) Financial innovation and endogenous growth. Journal of Financial Intermediation, 24(1): 1-24
Levine, R. (1997) Financial development and economic growth: Views and agenda. Journal of Economic Literature, 35, 688-726
Levine, R. (2004) Finance and growth: Theory and evidence. National Bureau of Economic Research Working Paper, 10766 (Sep)
Mays, E. (2001) Handbook of Credit Scoring. Chicago, USA: Glenlake Publishing Company, Limited
Mishkin, F.S., Eakins, S.G. (2012) Financial Markets & Institutions. Boston, USA: Pearson Education
Nielsen, C.K. (2015) The loan contract with costly state verification and subjective beliefs. Mathematical Social Sciences, 78: 89-105
Pagano, M. (1993) Financial markets and growth: An overview. European Economic Review, 37, 613-622
Parameswaran, S. (2011) Fundamentals of financial instruments: An introduction to stocks, bonds, foreign exchange, and derivatives. New York, NY: John Wiley & Sons
Poghosyan, T. (2012) Financial Intermediation Costs in Low-Income Countries: The Role of Regulatory, Institutional, and Macroeconomic Factors. IMF Working Papers, 12(140): i
Popov, L. (2016) Stochastic costly state verification and dynamic contracts. Journal of Economic Dynamics and Control, 64: 1-22
Rose, P.S., Marquis, M.H. (2011) Financial Institutions and Markets. New York, NY: McGraw Hill
Rowland, J. (1995) Credit scoring: Big opportunities for small and startup businesses. Credit World, 84(1); 21-25
Schmidt, R.H., Tyrell, M. (2003) What constitutes a financial system in general and the German financial system in particular?. in: Working Paper 11, University of Frankfurt
Solow, R.M. (1956) A contribution to the theory of economic growth. Quarterly Journal of Economics, vol. 70, br. 1, str. 65-94
Townsend, R.M. (1979) Optimal contracts and competitive markets with costly state verification. Journal of Economic Theory, 21(2): 265-293
Valev, N. (2006) Financial development and economic growth in Bulgaria. Georgia State University, October 25, 2016, www.gsu.edu/~econtv/financebulgaria.pdf
Were, M., Wambua, J. (2014) What factors drive interest rate spread of commercial banks? Empirical evidence from Kenya. Review of Development Finance, 4(2): 73-82
Wheelock, D.C., Wilson, P.W. (2012) Do Large Banks Have Lower Costs? New Estimates of Returns to Scale for U.S. Banks. Journal of Money, Credit and Banking, 44(1): 171-199
 

About

article language: Serbian, English
document type: Review Paper
DOI: 10.5937/ekonhor1603247G
published in SCIndeks: 02/02/2017

Related records

Ekonomski pogledi (2013)
Credit risk management system in commercial banking
Dragosavac Miloš

Panoeconomicus (2009)
Balkan countries: Catching up and their integration in the European financial system
Bonetto Fabienne, et al.

Panoeconomicus (2012)
Finance, growth and threshold effects
Allegret Jean-Pierre, et al.

show all [44]