Global Issues in Banking and Finance: 4th International Conference on Banking and Finance Perspectives PDF
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Springer Proceedings in Business and Economics Nesrin Ozatac Korhan K. Gokmenoglu Editors Global Issues in Banking and Finance 4th International Conference on Banking and Finance Perspectives Springer Proceedings in Business and Economics More information about this series at http://www.springer.com/series/11960 Nesrin Ozatac Korhan K. Gokmenoglu (cid:129) Editors Global Issues in Banking and Finance 4th International Conference on Banking and Finance Perspectives 123 Editors NesrinOzatac Korhan K.Gokmenoglu Eastern Mediterranean University Eastern Mediterranean University Famagusta, Turkey Famagusta, Turkey ISSN 2198-7246 ISSN 2198-7254 (electronic) SpringerProceedings in Business andEconomics ISBN978-3-030-30386-0 ISBN978-3-030-30387-7 (eBook) https://doi.org/10.1007/978-3-030-30387-7 ©SpringerNatureSwitzerlandAG2019 Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpart of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission orinformationstorageandretrieval,electronicadaptation,computersoftware,orbysimilarordissimilar methodologynowknownorhereafterdeveloped. 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ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Contents Determinants of Financial Inclusion: The Case of 125 Countries from 2004 to 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Nader Alber Asymmetric Effects of Credit Growth on the Current Account Balance: Panel Data Evidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Mehmet Fatih Ekinci and Tolga Omay What Drives the Banking Performance? Case of Eurasian Economic Union Countries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Alimshan Faizulayev and Isah Wada Education Matters for the Bottom of the Pyramid in Economic Development. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Amna Khaliq The Behaviour of the Financing Decision of the Russian Listed Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Bezhan Rustamov Fiscal Sustainability from a Nonlinear Framework: Evidence from 14 European Countries. . . . . . . . . . . . . . . . . . . . . . . . . . 65 Esra Hasdemir and Tolga Omay Corporate Governance: Achieving Good Corporate Governance in order to Deal with the Contagion Effects of Financial Crisis . . . . . . . 83 Mustafa Avcin Spillover Effect of Interest Rate Volatility on Banking Sector Development in Nigeria: Dynamic ARDL Bound Test Approach. . . . . . 111 Alimshan Faizulayev and Isah Wada Detecting Price Explosivity (Bubble) in Turkey’s Stock Prices: Evidence from an Radf Technique. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 Kelvin Onyibor and Okan Şafakli v vi Contents Nonlinearity in Emerging European Markets: Pre and Post Crisis Periods. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143 Ceyda Aktan and Tolga Omay The Firm-Specific Determinants of Capital Structure in Beverage Industry in Europe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 161 İlhan Dalci, Hasan Ozyapici and Doğan Unlucan Does the Financial Performance of Banks Change During the Global Financial Crisis? The Case of Palestine . . . . . . . . . . . . . . . . . . . . . . . . . 173 Wesam Hamed and Alimshan Faizulayev Index .... .... .... .... .... ..... .... .... .... .... .... ..... .... 187 Determinants of Financial Inclusion: The Case of 125 Countries from 2004 to 2017 Nader Alber Abstract This paper attempts to investigate the effects of GDP growth, GDP per capita, inflation rate and interest rate spread on financial inclusion. Financial inclusionhasbeenmeasuredbyaccountownershipatafinancialinstitutionforages 15+ and for ages 25+, automated teller machines and depositors with commercial banks. This has been conducted using a sample of 145 countries, over the period fromthe2004to2017.ResultsindicatethatGDPpercapitamayhaveasignificant positive effect on financial inclusion, while each of GDP growth, and interest rate spread may havea significant negativeeffect. Besides,inflationrate seemstohave no significant effect on financial inclusion. Moreover, robustness check assures these findings. (cid:1) (cid:1) Keywords Financial inclusion GMM technique Panel analysis 1 Introduction Financial inclusion allows the unbanked segments of society to join the formal financial system, which ultimately helps to alleviate poverty, promote job security and improve socialempowerment. Recently, financialinclusion is demonstratedin terms of each of financial stability, financial integrity and customer protection. Therefore, numerous countries have formally endorsed financial inclusion (I) as a domestic policy objective alongside stability, integrity, and protection objectives (collectively, “I‐ SIP”). Financialinclusionconcernswithimprovedeffectiveaccesstofinancialservices bythosewholackit(GPFI2011).Itaimsatencouragingtheunbankedpopulation to join the formal financial system to access financial services such as savings, payments, and transfers to credit and insurance (Demirguç-Kunt et al. 2008). It’s also defines as “a state in which all working age adults have effective access to N.Alber(&) FacultyofCommerce,AinShamsUniversity,Cairo,Egypt e-mail:[email protected] ©SpringerNatureSwitzerlandAG2019 1 N.OzatacandK.K.Gokmenoglu(eds.),GlobalIssuesinBanking andFinance,SpringerProceedingsinBusinessandEconomics, https://doi.org/10.1007/978-3-030-30387-7_1 2 N.Alber credit, savings, payments, and insurance from formal service providers (GPFI 2011). Financialinclusion,generallyreferstothewideavailabilityoffinancialservices and to their usage by low-income households and other disadvantaged groups. Shettar (2016) defines financial inclusion as the delivery of financial services at affordable costs to vast sections of low-income groups. In other words, financial inclusion tends to the integration of people who are economically and socially excluded from access to easy, safe and affordable financial services. According to (Sharma and Kukreja 2013), the financial Inclusion is needed to achieve many objectives that include: (1) economic objectives (for equitable growth), (2) financial objectives (through mobilization of savings), (3) social objectives (through poverty eradication) and (4) political objectives- (where it provides government programs with effective directions). AccordingtoDamodaran(2013),themainreasonsforfinancialexclusion,from thedemandsidearelackofawareness,lowincome,povertyandilliteracy;andfrom the supply side is distance from branch, branch timings and unsuitable products. It is important to distinguish between voluntary and involuntary financial exclusion. The World Bank (2014) defines voluntary exclusion as a condition in which a segment of the population or firms chooses not to use financial services, either because they have no need for them or for cultural or religious reasons. Adopting financial inclusion includes two steps (Singh 2017). The first step is being able to have access to a transaction account: Since a transaction account allows people to store money, and send and receive payments. A transaction account serves as a gateway to other financial services. Financial access facilitates day-to-day living, and helps families and businesses plan for everything from long-termgoalstounexpectedemergencies.Thesecondoneismovingfromaccess to account-to-account usage which should be adopted in countries where 80% or more of the population have accounts. World Bank (2014) suggests that achieving financial inclusion requires: (1)dealingwithmarketfailures,suchasasymmetricinformationandmoralhazard, (2) designing products that fit consumer needs at reasonable prices, (3) educating andprotectingconsumerssotheyavoidmakingcostlymistakesuponenteringinto financial contracts, (4) engagement of both private sector and government to expand the financial inclusion, and (5) technological progress. Financialinclusioncan be measured through thefollowingdimensions (Hannig and Jansen 2010): (1) access (the ability to use available financial services and productsfromformalinstitutions),(2)quality(therelevanceofthefinancialservice orproducttothelifestyleneedsoftheconsumer),(3)usage(permanenceanddepth offinancial service and product use) and (4) impact (changes in the lives of con- sumers that can be attributed to the usage of a financial device or service). Besides, financial inclusion could be measured using data sources such as The Global Findex, The FinScope Survey, FinAccess/Access to Financial Services Surveys, Financial Inclusion Tracker Surveys (FITS), Financial Inclusion Insight Surveys (FII), The IMF Financial Access Survey (FAS), GSMA Mobile Money DeterminantsofFinancialInclusion:TheCaseof125Countries… 3 Adoption Survey, Word Bank’s Global Payment Survey, The MIX’s Geospatial Maps and Fspmaps.com. In brief, this study tries to answer these four main questions: 1. Does “GDP growth” affect the “financial inclusion”? 2. Does “GDP per capita” affect the “financial inclusion”? 3. Does “inflation rate” affect the “financial inclusion”? 4. Does “interest rate spread” affect the “financial inclusion”? Thepaperisarrangedasfollows:afterthisintroduction,Sect. 2reviewsresearch literature that has concerned with “financial inclusion”. Section 3 explains how to develop hypotheses and measure variables. Section 4 presents descriptive and diagnostic statistics. Section 5 is for empirical work, presenting results, discussing how these results answer research questions with a robustness check. Section 6 summarizes the paper and provides remarks about conclusions. 2 Literature Review This section tries to present some of previous work, which has been conducted in the field of financial inclusion. Some papers concern with measuring financial inclusion (e.g. Honohan 2007; Sarma 2008; Amidžić et al. 2014 and Camara and Tuesta2014).Othersindicateitsimportance(e.g.Sarma2010;Subrahmanyamand Acharya 2017; Sethi and Acharyaa 2018; Inoue 2018; Neaime and Gaysset 2018; Bakar and Sulong 2018). Recently, financial inclusion is demonstrated in terms I-SIP (e.g. Nsanzabaganwa 2014; Alber 2019). Regarding measuring financial inclusion, constructs a financial access indicator that captures the fraction of the adult population in each economy with access to formal financial intermediaries, which captures only one dimension of financial inclusion. Besides, Sarma (2008) computes a sub-index for each dimension of financialinclusion(access,availability,andusage)andaggregateseachindexasthe normalizedinverseofEuclideandistance. Theadvantageofthisapproachisthat it is easy to compute and does not impose varying weights for each dimension. Amidžićetal.(2014)constructsafinancialinclusionindicatorasacompositeof variablespertainingtomultipledimensions:outreach(geographicanddemographic penetration), usage (deposit and lending), and quality (disclosure requirement, dispute resolution, and cost of usage). Each measure is normalized, statistically identified for each dimension, and then aggregated using statistical weights, the aggregationfollowingaweightedgeometricmean.CamaraandTuesta(2014)uses two-stage principal component analysis, where, in the first stage, the authors esti- matethreesub-indices:usage,access,andbarriersandconstructaweightedaverage index. In the second stage, they estimate the dimension weights and the overall financial inclusion index by using the dimension sub-indices. 4 N.Alber Regardingtheimportanceoffinancialinclusion,Sarma(2010)indicatesthatthe importance offinancial inclusion is due to its role in (a) facilitating efficient allo- cationofproductiveresources,(b)providingaccesstoappropriatefinancialservices cansignificantlyimprovetheday-to-daymanagementoffinances,and(c)reducing the growth of informal sources of credit (such as moneylenders). Besides, Demirguc and Klapper (2012) finds that the higher financial inclusion in a given countries the higher the growth of the economy. Likewise, Subrahmanyam and Acharya (2017) argues that, financial inclusion boost growth compared with demand following approach. Moreover, Sethi and Acharyaa (2018) indicates that financialinclusionencouragegrowthfor31countriesusingdynamicOLS(DOLS) and fully modified OLS (FMOLS) techniques. Inoue (2018) investigates the effect of financial development on poverty con- ditionsinIndia.Theresultsindicatethatfinancialinclusionandfinancialdeepening affect the poverty ratio significantly negative for public sector banks, but not sig- nificant for private sector banks. Besides, Naime and Gaysett (2018) demonstrates the impact offinancial inclusion on income inequality, poverty, and financial sta- bility. Results indicate that while financial integration is a contributing factor to financialinstabilityinMENA,financialinclusioncontributespositivelytofinancial stability. Besides, financial inclusion affects income inequality negatively. However, it has no effects on poverty. IntermsofI-SIPframework,BakarandSulong(2018)demonstratestheeffectof financial inclusion on economic growth. The optimistic views for financial inclu- sionongrowth,based ontheaccessibilityoffinancialservices includes;expansion of bank branches, minimizing a barrier in access to finance and contribution of banking sector. On other hand, the negative contribution offinancial inclusion on growth is due to weak financial system, low availability of financial system. It is suggestedthat, using a multidimensionalvariable may lead tobetterassessmentof the effect offinancial inclusion on growth. Moreover, Nsanzabaganwa (2014) explores the linkage between financial inclusion, stability, integrity, and consumer protection using the Rwandan case. Thisstudyarguesthatsofar,managingthetrade-offsandharnessingthesynergies between financial inclusion, financial stability, financial integrity and financial consumer protection in Rwanda has been a difficult but feasible. Recently, Alber (2019) attempts to demonstrate the 4 dimensions of I-SIP in terms of both of its conceptual framework, measurement indicators and related literature. Moreover, it triestopresentanddiscussthelinkagesbetweenfinancialinclusionandtheother3 dimensions. Comparing with previous work, the current study tries to investigate the deter- minants of financial inclusion, while previous work tends to address its measure- ments, importance and linkages with other I-SIP dimensions. Besides, this study usesasampleof145countries,overtheperiodfromthe2004to2017,whichseems to have more coverage.
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