The present research work has set to examine the performance of Greek co-operative banks and their importance for the development of the local areas they serve. The decade of the '90s can be regarded as the one in which Greek co-operative banks has actually emerged and made their first successful steps. Three credit co-operatives at the beginning of the decade were transformed into cooperative banks in 1992 when the legal framework provided such an opportunity. At the dawn of the new millennium there were 15 co-operative banks, all located at provincial towns. Within this period they have managed to build their apex institutions, a national association and their central bank. In order to form the framework of analysis, the research approach focussed on the dual capacity of co-operative banks i.e. as a local grass-root initiative and as a local financial intermediary. It questioned, from a theoretical and from a policy implementation perspective, the characteristics that a local initiative should enjoy in order to contribute to local and regional development. On the other hand, it tried to explore the potential of a local bank in a rapidly changing European banking market. The history and experiences of financial co-operatives under different settings has been used as a reference point for comparisons and necessary evaluations. This work examines the guidelines for the evaluation of the performance of the Greek co-operative banks. However, as this thesis is the first systematic approach of the co-operative banking in Greece, it had to provide evidence for the reasons that delayed their appearance until 1993 and for the reasons that made their entrance in the market possible. These required a review of the evolution of the Greek banking system and of the historical developmental conditions in order to be addressed. Field work comprised two surveys conducted by the researcher. The first was addressed to the fifteen co-operative banks. With the second survey, the researcher approached a stratified sample of 308 members, whom he contacted for personal interviews on the basis of a structured questionnaire. Information derived from these surveys along with secondary data that were collected from various sources, were used for the evaluation of the performance of the Greek co-operative banking system. The analysis showed that Greek co-operative banks are still found in a period of transition. This rather concerns internal growth strategies and policies to strengthen their position at local markets and less the possibility of new entrances in the local scene. Moreover, there appears to be a wide gap in the performance of various initiatives that stress for the necessity of strengthening further their organizational structure. On the other hand, the analysis provided evidence for a performance that can alter essentially the quantitative and qualitative characteristics in the local context and influence positively the development process in the periphery. In order to retain their ability to influence the financial markets and the development process, the Greek co-operative banks would have to create strong links with local people. Building a co-operative corporate identity is regarded as the most promising direction for them to follow in order to signal their difference in a highly competitive banking market and within a most demanding rural development context.

The first essay introduces a Bayesian logistic smooth transition vector autoregression (LSTVAR) approach to investigating the impact of international business cycles on the UK economy. We find that the British business cycle is asymmetrically influenced by growth in the US, France and Germany. Overall, positive and negative shocks generating in the US or France affect the UK in the same directions as the shock. However, a shock emanating from Germany always exerts negative cumulative effects on the UK. Further, a positive shock arising from Germany adversely affects the UK output growth more than a negative shock of the same size. The second essay proposes a Bayesian method to investigating the purchasing power parity (PPP) utilizing an exponential smooth transition vector error correction model (ESTVECM). Employing a simple Gibbs sampler, we jointly estimate the cointegrating relationship along with the nonlinearities caused by the departures from the long run equilibrium. By allowing for symmetric regime changes, we provide strong evidence that PPP holds between the US and each of the remaining G7 countries. The model we employed implies that the dynamics of the PPP deviations can be rather complex, which is attested to by the impulse response analysis. The final essay proposes a Bayesian approach to exploring money-output causality within a logistic smooth transition vector error correction framework (LSTVECM). Our empirical results provide substantial evidence that the postwar US money-output relationship is nonlinear, with regime changes mainly governed by the lagged inflation rates. More importantly, we obtain strong support for long-run non-causality and nonlinear Granger-causality from money to output. Furthermore, our impulse response analysis reveals that a shock to money appears to have a negative aggregate impact on real output over the next fifty years, which calls for more caution when using money as a policy instrument.

Debt which emerged as a result of excessive lending by the advanced nations to disorganised and badly managed economies is oppressing the world’s poorest and most vulnerable whilst enriching wealthy creditors. This study investigates the relationship between debt and the economic growth of 56 heavily indebted poor countries from 1969 to 2000 in three empirical chapters. The first empirical chapter examines the non-linearity of the debt-growth relationship, i.e. it estimates the threshold below which debt enhances growth whilst above which debt prevents growth. The preferred endogenous threshold model of Hansen (1996, 2000) suggests that debt becomes detrimental to growth when debt-to- GDP ratio approaches 45%. Hence a country’s debt is considered sustainable, in the sense that it affects growth positively and can be serviced without any difficulty, as long as its debt-to-GDP ratio is below 45% threshold. An alternative to threshold concept of debt sustainability is the concept of intertemporal sustainability, which defines debt as sustainable providing that actual debt level equals the present discounted value of future trade balance surpluses. This, in terms of the time series properties, implies that debt is sustainable if there is long-run economic relationship between debt stock and output. The second empirical chapter investigates this using numerous integration and cointegration methods. The results from the best tests suggest that debt is unsustainable. Nonetheless, these methodologies have low power and categorise countries into a simple dichotomy of sustainable vs. unsustainable, whereas in reality sustainability is a continuum measure. Thus, the final empirical chapter proposes the use of persistence techniques for assessing debt sustainability, i.e. estimating a Debt Sustainability Index (DSI). Estimates of the DSI conclude that Latin American and Caribbean (LAC) countries have less sustainable debt than Sub Saharan African (SSA) countries. Furthermore, the oil price, the interest rate and the commodity price shocks have played a substantial role in causing the debt crisis but the contribution of other factors unidentified is larger. The oil shocks are the most important for both groups whilst the interest rate is the least important for LAC and the commodity price for SSA.

The first essay attempts to explain how the economy responds to transient exogenous exchange rate and cost-push shocks using a small open economy New Keynesian dynamic general equilibrium model that incorporates prices and wage stickiness and cost channel of interest rate to inflation. The model shows that a low degree of prices and wage rigidity, high reliance on imports and inflation-biased monetary policy, increases exchange rate pass-through to domestic and consumer prices. The model demonstrates that the transient nature of cost-push shock, combined with rational expectation behaviour of price setter and full policy credibility, does not require the monetary authority in developing economy to respond to the shock by tightening monetary policy. The second essay investigates the relative importance of monetary transmission channel to inflation of passing persistent shock to the risk premium. The findings show that nominal exchange rate depreciation, triggered by a more persistent shock to interest risk premium, worsens the state of the economy in the short- and long-run. Such distinctive shocks effect is transmitted through the economy that typifies lack of response of consumer price disinflation to interest rate tightening caused by high real rigidity, strong cost channel of interest rate, strong cost channel of exchange rate pass-through and weak demand-side channel of exchange rate pass-through. The final essay analyses Indonesia‘s inflation determinant using a model that links banking to real sector, central bank and government. It explores interest rate cost-push channel in terms of cost of equity and cost of borrowing, enhances the previous findings about the lack of response of disinflation to interest rate policy tightening and discusses the nexus between monetary and banking policy. The strong interest rate cost channel has some implications for the behaviour of and policy for banking related to the achievement of the inflation target.

Similar to global currencies, the Zambian currency (kwacha) has varied considerably against major currencies since the early 1990s. Existing empirical evidence reveals that fluctuations in exchange rates can potentially generate distortions in the economy. However, insufficient empirical evidence on Zambia exists. Thus, this thesis contributes empirically to the literature on exchange rate volatility and its impact on the economy with Zambia as a case study. Consequently, volatility in the kwacha bilateral exchange rates is modelled using three alternative GARCH models in order to characterise the underlying currency volatility. The influence of fundamental factors on conditional volatility of exchange rates is also examined. In addition, principal components analysis (PCA) is used to capture the common underlying pattern in the estimated conditional volatility series through which a new GARCH series (GARCH-PCA) is constructed and used in trade and monetary and foreign exchange intervention rule analysis as an alternative measure of exchange rate risk. PCA has not been previously employed in such analyses. Cointegration analysis is used for trade-exchange rate volatility analysis while SVAR and GMM are employed with variations to the conventional specification of monetary and foreign exchange intervention rules in the literature in determining the relevance of exchange rate volatility in monetary and foreign exchange policies. The results reveal that the kwacha bilateral exchange rates examined are characterised by different conditional dynamics in terms of volatility persistence and response to price shocks. The positive influences of exchange rate regime, money supply and openness on conditional volatility predominate. Exchange rate volatility affects international trade flows and underpins monetary policy and foreign exchange decision-making process. Thus, the results are amenable for trade policy formulation and monetary policy improvements and they justify foreign exchange interventions. GARCH-PCA, an index of exchange rate volatility, reflecting influences from Zambia proves to be a useful alternative measure of exchange rate volatility. Its performance is comparable to the trade-weighted measure in terms of sign, size and statistical significance of the estimated coefficients.

In the current thesis, the efficiency of the Egyptian and other four MENA exchanges is examined. The first issue of interest is whether market efficiency in Egypt is related to size and regulatory changes. Employing weekly data for the period 1997-2007 and a battery of variance ratio tests (VRs), results indicated that the market was inefficient in pricing all securities during the first sub-period with tight price limits regime, however; it has become efficient in pricing securities, excluding small-capitalized firms, after the expansion of price limits coupled with adopting trading halt for few minutes if prices hit their new limits. The second issue considered is testing for weak-form-efficiency in five MENA exchanges during 1995-2009 using VRs in rolling window estimation to accommodate developments in the underlying exchanges. Results indicate that Turkish and Israeli exchanges are the most efficient throughout the whole period whereas both the Egyptian and Moroccan exchanges moved towards efficiency since late 2002 and the Jordanian exchange experienced inefficiencies during the end of the period. Exchange rates do not matter in determining the dynamics of equity markets examined. The last issue examined is the interdependence and information transmission across super sectors within the same exchange in Egypt, Turkey, and Israel. Multivariate co-integration analysis, which is executed from the domestic investor perspective, indicates the absence of long-term relationship in either exchange. In general, generalised impulse responses indicate that a positive shock in one index in either exchange affects other indexes in the same exchange. However, this impact tapers off quickly. More importantly, most of the impact is on the index experiencing the innovation and the effect on the remaining indexes is relatively small.

Evidence in the literature points to a puzzling initial increase in inflation after an increase in nominal interest rates. This can be explained by the fact that firms have to borrow money to pay wages in advance, i.e., by the cost channel. In this paper, the study of the cost channel is extended to an open economy with sticky prices. It is shown that a broadened concept of the cost channel has significant implications for the economy's dynamics and monetary policy, and also contributes to explain some interesting empirical evidence. Supply side effects of interest rates and import prices on inflation have important implications for monetary policy. Usually such effects are estimated using the New Keynesian Phillips Curve (NKPC). However, the estimation of the cost channel maybe distorted when import prices are omitted from that curve. To address this issue, we estimate empirically the NKPC for domestic and CPI inflations. In relation with this, we also study if imports of consumption goods are paid in advance, whether there is an immediate pass-through of exchange rates, and if imports should be treated as final consumption goods and/or as inputs in production. Another concern of monetary policy in a monetary union is inflation differentials, since they can undermine the success of the union. Against this background, our goal is to explore the determinants of inflation differentials in twelve euro area countries, focusing on the role of the business cycle. On one hand, convergence of inflation rates and business cycles is analysed with both an unobserved component model estimated with the Kalman filter and a common factor approach. On the other hand, an econometric analysis of the determinants of inflation differentials is performed.

This thesis investigates impacts of oil price on monetary policy in oil-exporting countries. The second chapter reviews the forward-looking new Keynesian model, to show the need for credibility and conservativeness in order to have less inflation, which are the theoretical foundations of central bank independence (CBI). Then by defining CBI in detail and reviewing indices for CBI, the thesis looks at the empirical works undertaken in countries to see whether or not theory is supported in the real world. In the third chapter, the thesis applies central bank independence index to assess empirically the impact of an oil price shock on monetary policy in oil-exporting countries. Two legal central bank independence indices are chosen and calculated for the top nine oil-exporting countries. Using a panel data set and a fixed effects model, it is shown that a monetary authority with higher central bank independence implements a more contractionary (or less expansionary) monetary policy after an increase in oil price compared to another central bank which is more dependent. Chapter four considers linearity and specification tests along with estimating in vector smooth transition regression (VSTR) models and tries to improve them. In the empirical section, a VAR model with time varying coefficients are proposed to analyse the relationship between inflation and monetary policy in Iran as an oil-based economy. The form of coefficients is a logistic smooth transition function and oil price is used as the transition variable. This VSTR model has two different regimes based on high and low oil price and they have different dynamic properties. The model supports the asymmetric effects of real money and oil price on inflation and shows that the central bank cares more about inflation in the regime with high levels of oil price. This chapter also shows that forecasting of inflation with the VSTR is superior to forecasting using the linear VAR.

This study uses ethnographic and discourse analytical methods to investigate the socio-cultural settings of microfinance and ROSCAs (Rotating Savings and Credit Associations) in Pakistan. The fieldwork was conducted in the city of Dera Ghazi Khan in Pakistan from May, 2009 to October, 2009. The data was collected through participant observation, interviews and pictures with ROSCA participants and microfinance borrowers. Interviews were conducted, transcribed and analysed in native language and key concepts were examined. The study found that economic and cultural factors were interwoven. It was found that financial discourse was influenced by, and influenced, the socio-cultural settings. The prevailing socio-cultural context shapes the behaviours and actions of users of microfinance and ROSCAs and also, in turn, is reshaped by ROSCAs and microfinance. The principal findings are as follows. ROSCA formations are based on the existing social structure and play a vital role in creating and maintaining communities. Moreover, part of the establishment of a community is found to be predicated on the exclusion of others. Microfinance also draws upon existing social structures but it is a commercial financial system and this commercial discourse of microfinance permeates the various cultural norms and obligations to enable instrumental objectives to be achieved. A widespread discourse of exploitation and vulnerability was found and this suggests that microfinance has a negative impact on the lives of some individuals and communities. On the other hand, unlike micro-borrowers, ROSCAs members do not talk about coercive mechanisms to influence behaviour and, indeed, the greater embeddedness of ROSCAs in the socio-cultural context makes undesired actions, such as defaults, a rare phenomenon.

This thesis analyses fiscal policy in four models of economic growth. The first model is a variant of Jones [61]; overlapping generations are introduced and it is shown that the allocation is dynamically inefficient. As in Diamond [42], a debt financed transfer to current generations can lead to a Pareto improvement; interestingly, the improvement is achieved not by discouraging capital accumulation but through a reallocation of labour between sectors. The second is a two-sector model of growth with public capital. It is shown that perpetual fiscal deficit cannot be sustained. The first best allocation is examined and for the log-utility case an explicit solution can be found. Implementation of the optimal allocation is discussed. The third model features disembodied technological progress as in Solow [100], but it is assumed dependent on public investment. Conditions under which perpetual deficits are sustainable are discussed. The fourth and last model introduces excludable and congestible public services. The optimal fiscal policy, including optimal user charges, is studied. It is shown that in the long-run the optimal income tax is zero and that revenues from user charges is more than sufficient to finance public investment in infrastructures.