Aging of populations and convergence between developed and developing countries in per capita incomes are shaping the evolution of saving, investment, capital flows, and, in particular, the cost of capital. When considering these trends, the existing literature argues for either continued, low...

This paper uses Ethiopian data to explore credit rationing in semi-formal credit markets and its effects on farmers'resource allocation and crop productivity. Credit rationing -- both voluntarily and involuntarily -- is found to be widespread in the sampled rural villages, largely because of...

In countries with limited access to finance, firms accumulate retained earnings to finance indivisible investment projects. McKinnon (1973) illustrates that when cash is used as a primary store of value, inflation may discourage investment as it increases the cost of accumulating retained...

While debt-financed productive public investment raises a country’s debt ratios in the short run, it can also generate higher growth, revenues, and exports, leading over time to lower debt ratios. This paper develops a framework to assess whether countries meet the conditions for realizing the...

This paper studies the extent to which firms in China and India use capital markets to obtain financing and grow. Using a unique data set on domestic and international capital raising activity and firm performance, it finds that the expansion of financial market activity since the 1990s has been...

Equilibrium credit is an important concept because it helps identify excessive credit provision. This paper proposes a two-stage approach to determine equilibrium credit. It uses two stages to study changes in the demand for credit due to varying levels of economic, financial and institutional...

From 2008 to 2011, Egypt was hit by significant shocks, both global and country-specific. This paper assesses the impact of the resulting macroeconomic instability on the banking sector, and examines its role as a shock absorber. The Central Bank of Egypt accommodated the shocks by supplying...

This paper analyzes and reconciles macro and micro evidence on savings and factors that affect savings, as well as possible policy implications. At the aggregate level, the main question is how savings are affected by growth and macroeconomic policies and variables (fiscal policy, exchange rate,...

This paper contributes to the predominant diversification debate that has been ongoing in Trinidad and Tobago for more than three decades. The paper makes a determination of the key impediments to the country's attempts at diversification. Econometric techniques are applied on panel data to...

This paper investigates the African financial development and financial inclusion gaps relative to other peer developing countries. The paper uses a set of variables related to financial development and inclusion. It first estimates the gaps between African countries and other developing...