This paper aims to make an empirical contribution to the discussion of the role of banks and to find out if banking is a declining industry. It takes into account that the role of banks is declining in the United States and the fact that the American economy usually sets the trend for the other economies. This implies that there are increasing trends of disintermediation, securitization and an increase in the importance of nonbank financial intermediaries (Schmidt, Hackethal and Tyrell 1997). This paper seeks to find out if this is indeed the case in the U.S and if so then is it happening in other European and African economies. Another important reason for this study is to find out what factors are causing the structures of financial systems to change and what impact these changes have on financial institution intermediation. Comparisons are made between developed countries in Europe and developing countries in Africa to observe the trends of intermediation/disintermediation.

Many economists have observed that the financial system has a positive and monotonic effect on economic growth. In this study we reaffirm the finance-growth nexus. We adopt a three-tier approach for the study’s methodology using panel data of 66 countries from 1986 to 2005. Firstly, we test for the finance-growth nexus with particular emphasis on financial sector indicators that best represent the effective financing activity in the economy. Secondly, we examine the financial market type that exacerbates or mitigates the effects of a shock (financial crisis). Thirdly, we investigate the causes of financial crisis by looking at both the macroeconomic and institutional, and micro-level determinants of banking crisis. Our results show that financial development enhances economic growth, more so, in the middle income countries. We also find that increased domestic private credit and activity reduces the effects of a financial shock on growth. In addition, openness of the economy in low income Sub-Saharan African countries is important for growth even where financial development indicators appear not to influence growth. In most economies the investment channel and openness are consistent in explaining economic growth.

Thesis (Ph. D.)--University of Chicago, Dept. of Economics, June 1999. / Includes bibliographical references. Also available on the Internet.

No description available.

Thesis (Ph. D.)--New York University, 1995. / Includes bibliographical references (leaves 134-139).

Thesis (Ph. D.)--Kansas State University, 2002. / Includes bibliographical references (leaves 73-78).

Thesis (Ph. D.)--University of Wisconsin--Madison, 1988. / Vita. Includes bibliographical references.

Thesis (Ph. D.)--University of Texas at Austin, 2004. / Supervisor: P. Dean Corbae. Vita. Includes bibliographical references.

This thesis includes three interconnected essays which, building on the work by Hart and Zingales (2011), lay down the foundations for a new theory of financial intermediation. The first essay explains the Hart and Zingales (HZ) framework and shows that their results are not general. In the HZ model, there is a lack of simultaneous double coincidence of wants, and future income is not pledgeable. This implies that agents need money to trade. However, holding money entails an opportunity cost that leads to a waste of resources. Because of this inefficiency, pecuniary externalities have welfare consequences that private price-taking agents fail to internalize. I find that HZ's result, whereby the market produces inefficiently high levels of liquidity, cannot be generalized, because the conflict between private and social incentives to create money depends on agents' preferences. In the second essay I construct a framework that explains the transactions, precautionary and speculative demand for money. Again, the welfare analysis indicates that, depending on individuals' preferences, the market may produce inefficiently high or low levels of liquidity. The results also evidence that the speculative demand for money exists only when households are risk averse in their wealth. In that case, private and social incentives to hold money are stronger, but the market produces insufficient means of payment relative to the social optimum. The third essay introduces active financial institutions, and examines the role played by moral hazard in the provision of and demand for liquidity. Limited liability and the non-contractibility of bank investment policy induce highly levered financial institutions to invest in an inefficient gambling asset. I find that, when the probability that banks gamble is non-zero, the primary goal of public intervention is to address the moral hazard problem by restricting the creation of liquidity. Several policies to address this inefficiency are discussed and analyzed.

This paper takes a panel series approach to investigate whether the intensity of financial intermediation encouraged investment and growth in 12 Central and Eastern European(CEE) economies from 2001 to 2015. The results from our regression confirmed our hypothesis that there was a uni-directional relationship between financial intermediation and economic growth and while we only analyzed 12 CEE countries, this relationship has held among other developing countries as well. We will provide background on the general CEE transition out of communism and the ensuing ebbs and flows of the financial and real sector through the early 2000s. The 2008 financial crisis marked a key event for CEE that gave us the opportunity to analyze important characteristics of how our model acted before and after a major crisis. We found a significant relationship with the crisis and our finance-growth model that furthered our prediction that the expansion of financial intermediaries in developing countries acts as a key mechanism through which an economy grows. The research allowed us to understand the nature of statistical causality between financial and real sector activity.