scholarly journals Finance and Employment in Developing Countries

2017 ◽  
Vol 17 (189) ◽  
Author(s):  
Mai Chi Dao ◽  
Lucy Qian Liu
Keyword(s):  
Developing Countries ◽  
Job Creation ◽  
Financial Constraint ◽  
External Financing ◽  
Working Capital ◽  
Firm Level ◽  
External Finance ◽  
The World Bank ◽  
Financing Constraint ◽  
Capital Financing

We study the effect of external financing constraint on job creation in emerging markets and developing countries (EMDC) at the firm level by looking at a specific transmission channel - the working capital channel. We develop a simple model to illustrate how the need for working capital financing of a firm affects the link between financial constraint and the firm's job creation. We show that the effect of relaxing financial constraint on job creation is greater the smaller the firm scale and the more labor-intensive its production structure. We use the World Bank Enterprise Surveys data to test the main predictions of the model, and find strong evidence for the working capital channel of external finance on firm employment.

scholarly journals Financial constraint, trust, and export performances: firm-level evidence from Africa

2021 ◽  
pp. 1-23
Author(s):  
Maty Konte ◽  
Gideon Ndubuisi
Keyword(s):  
Financial Constraints ◽  
Interpersonal Trust ◽  
Negative Relationship ◽  
Financial Constraint ◽  
African Countries ◽  
Firm Level ◽  
Country Level ◽  
The World Bank ◽  
Negative Effect ◽  
Enterprise Surveys

Abstract Several existing studies have documented a negative relationship between firm financial constraint and export activities but do not attempt to examine factors that could attenuate this relationship in Africa. In this paper, we examine the effect of financial constraint on exports in Africa and explore how the level of trust in countries where firms are located shapes this relationship. We combine the World Bank Enterprise Surveys with different measures of country-level personal and interpersonal trust computed from the Afrobarometer surveys of 19 African countries. Our results show that financial constraints negatively affect export activities. However, this negative effect is attenuated for firms that are located in trust-intensive societies. These findings are robust to different specifications. Interestingly, we find that small and medium-sized enterprises in Africa are more likely to be affected by financial constraints but also more likely to benefit from a higher level of both personal and interpersonal trust, while for larger firms only interpersonal trust matters.

Pattern and Trends of Financing in the Indian Manufacturing Sector

2021 ◽  
Vol 9 (1) ◽  
pp. 105-127
Author(s):  
Pramod Sinha ◽  
Seshanwita Das
Keyword(s):  
Manufacturing Sector ◽  
Balance Sheet ◽  
External Financing ◽  
Firm Level ◽  
External Finance ◽  
Flow Of Funds ◽  
Operating Profit ◽  
Methodological Improvement ◽  
Internal Sources ◽  
Indian Manufacturing Sector

The firm’s choice to finance its asset reveals the pattern of flow of funds, the availability and reliance on sources of such funds. We study ‘Sources of fund’ statement for an unbalanced panel of nearly 3400 firms in the manufacturing sector during the financial year 2011–2018. We find that financing has been mostly met through internal sources, and the reliance on external financing has decreased during this period. We introduce a methodological improvement by studying change in total assets to understand financing. A series of empirical models was formulated to identify factors that influences external financing. The result shows that unlisted, non-exporting, new-aged and small-sized firms have higher share of external financing. Further, profitability ratios like return on asset and operating profit margin, tangibility ratio like gross fixed assets to total assets, and reserves to total assets, shows negative and significant relationship with share of external financing to total funds and external financing to total assets. Our results add the dimension that interaction of change in assets with firm specific characteristics provides a meaningful way to extend the results of existing models. We argue that while existing methods use limited balance sheet items for analyzing internal versus external finance, firm level decisions ought to include all sources of finance. JEL Classifications: D22, G30, G32

Mean reversion and predictability of remittances

2014 ◽  
Vol 41 (12) ◽  
pp. 1209-1219
Author(s):  
Daniel Makina
Keyword(s):  
Developing Countries ◽  
Mean Reversion ◽  
Financial Flows ◽  
Monthly Data ◽  
Content Type ◽  
External Finance ◽  
The World Bank ◽  
Augmented Dickey Fuller ◽  
Random Flows ◽  
Practical Implications

Purpose – The purpose of this paper is to examine the predictability of remittances in individual developing countries. It achieves this objective by testing for mean reversion (i.e. stationarity) in the monthly remittance series reported to the World Bank by 21 developing countries. Design/methodology/approach – Unit root tests on remittance time series are undertaken using three tests – the augmented Dickey-Fuller test, the Phillip-Peron test and the Kwiatkowshi, Phillips, Schmidt and Shin test. Stationarity of series in levels would indicate mean reversion and predictability of remittances. Findings – The paper finds significant evidence of mean reversion and hence predictability in remittance inflows in 17 developing countries. Practical implications – Remittance inflows, which have become an important source of external finance for many developing countries, are not random flows but a stable and predictable stream of financial flows. Originality/value – Prior research has focused on volatility of remittances in comparison with other capital flows and then inferred stability from them having lower volatility. Using available monthly data, this paper is the first to directly test for mean reversion and hence predictability of remittances.

Financialisation, institutions and financing constraints in developing countries

2019 ◽  
Vol 43 (4) ◽  
pp. 825-866 ◽  
Author(s):  
Charilaos Mertzanis
Keyword(s):  
Developing Countries ◽  
Financing Constraints ◽  
External Financing ◽  
Access To Finance ◽  
Firm Level ◽  
Country Level ◽  
Level Data ◽  
Financial Depth ◽  
Level Information ◽  
The Impact

Abstract The paper uses a consistent firm-level data from the World Banks Enterprise Surveys to explore the impact of financialisation in the economy on firms’ access to finance in 138 developing countries. Access to finance reflects survey-based firms’ perceptions of external financing constraints. Financialisation is proxied by consistent cross-country measures of financial depth. These proxies capture separately the role of bank-based versus market-based financing. Firm-, sector- and country-level information is jointly used for the analysis. Firm-specific characteristics and economic and non-economic national factors are included as controls. The results show that the proxies of financialisation are broadly robust predictors of financing constraints of firms in developing countries. However, the magnitude of the financialisation effect varies between bank-based and market-based channels of financing as well as between low- and high-income countries, and it is influenced by social, institutional and religious factors.

Competition and Operating Volatilities around the World

2018 ◽  
Vol 55 (2) ◽  
pp. 517-547
Author(s):  
Tanakorn Makaew ◽  
Vojislav Maksimovic
Keyword(s):  
Developing Countries ◽  
Developing Economies ◽  
Developed Countries ◽  
Market Imperfections ◽  
International Studies ◽  
Competition Intensity ◽  
Firm Level ◽  
External Finance ◽  
Capital Market Imperfections ◽  
Stability Performance

Numerous papers have shown that developing economies are more volatile. We show that, despite greater aggregate and industry stability, performance and size of individual firms in developed countries are more volatile. In developing countries, market imperfections insulate incumbent firms from competition. Consistent with this, firms in developing countries have higher profit, higher market concentration, and less capital raising. Cross-country differences in operating risk and competition intensity are greater in industries that are dependent on external finance, where we expect higher impacts of capital-market imperfections. We show the inverse relation between aggregate and firm-level volatilities has important implications for international studies of cash holding.

scholarly journals Why do firms hold cash? Evidence from Korean stock listings

2016 ◽  
Vol 13 (3) ◽  
pp. 311-321
Author(s):  
Paul Moon Sub Choi ◽  
Joung Hwa Choi
Keyword(s):  
Corporate Governance ◽  
Cash Flow ◽  
Credit Rating ◽  
Cash Holdings ◽  
Jel Classification ◽  
External Financing ◽  
Firm Level ◽  
External Finance ◽  
Cash Flow Volatility ◽  
Corporate Cash Holdings

Corporate governance and the availability of external financing can be important determinants of corporate cash holdings. In this research, in line with Opler et al. (1999), the authors find that Korean firms’ cash holdings are affected by firm-level characteristics including firm size, leverage, market to book, cash flow ratio, net working capital, and cash flow volatility in addition to corporate governance. Rather than agency-prone, the authors can ascribe the increase in cash holdings to the precautionary corporate demand for cash (Campbell et al., 2001). The authors also report that operating risks stemming from cash flow volatility, unavailability of external finance, credit rating downgrades, etc., may be associated with precautionary corporate demand for cash. Lastly, it is documented that corporate governance proxied for by block and/or insider ownership stakes is inversely associated with corporate cash holdings. Keywords: demand for money, corporate governance, corporate cash holding. JEL Classification: G39, E41, G34

Magical banking capital: Neo-endogenous money (NEM)

2020 ◽  
Vol 1 (1) ◽  
pp. 27-35
Author(s):  
Sovanbrata Talukdar
Keyword(s):  
Stock Market ◽  
Central Bank ◽  
Financial Market ◽  
Positive Relationship ◽  
Excess Return ◽  
Control Individual ◽  
Financial Constraint ◽  
Imperfect Market ◽  
External Finance ◽  
Endogenous Money

This research emerges with internal financial constraint. How financial constraint may lead to economic recess or back. This financial constraint is different than external finance constraint, and is not due to lack of gold, etc. It explains the positive relationship between excess return in stock market (ERSM) and non-real funding or riskier credit. The matter comes under imperfect market banking. It includes subsequently banking behavior and failure of central bank policy to control individual banks under these circumstances. In addition, it presents measures to get awareness before default comes, as financial default rare and crisis in financial market comes much before that.

Conference on the Role of Industrialisation in Developing Countries

1964 ◽  
Vol 2 (3) ◽  
pp. 440-442
Author(s):  
Ronald Robinson
Keyword(s):  
Developing Countries ◽  
United Nations ◽  
World Bank ◽  
Business Executives ◽  
Agricultural Revolution ◽  
The World Bank ◽  
The World ◽  
The United Nations

At the fourth Cambridge conference on development problems, the role of industry was discussed by ministers, senior officials, economic advisers, and business executives, from 22 African, Asian, and Caribbean countries, the United Nations, and the World Bank. Have some, if not all, of Africa's new nations now reached the stage when it would pay them to put their biggest bets on quick industrialisation? Or must they go on putting most of their money and brains into bringing about an agricultural revolution first, before striving for industrial take-off? These questions started the conference off on one of its big themes.

Electricity Liberalisation in Developing Countries

2017 ◽  
Vol 17 (2) ◽  
pp. 99-115 ◽  
Author(s):  
David Hall ◽  
Tue Anh Nguyen
Keyword(s):  
Developing Countries ◽  
Developing Economies ◽  
Electricity Sector ◽  
Power Markets ◽  
The Public ◽  
Private Sector Investment ◽  
The World Bank ◽  
Generating Capacity ◽  
Global North ◽  
Extensive Growth

Liberalisation of the electricity sector by unbundling the networks from generation and creating power markets has been promoted to developing countries by the World Bank and others for nearly two decades, in order to stimulate private sector investment. The paper presents cross-country comparisons of progress with liberalisation in the largest developing economies along with investment indicators of generating capacity and access to electricity networks, showing extensive growth in investment regardless of the extent of liberalisation, predominantly by the public sector. The liberalisation model is now losing credibility even in the global north.

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