Regional foreign banks and financial inclusion: Evidence from Africa

in Economic Modelling (in press)

Regional foreign banks expanded quickly over the past decade in developing and emerging countries and have a growing influence in banking systems. We question whether the development of African regional ... [more ▼]

Regional foreign banks expanded quickly over the past decade in developing and emerging countries and have a growing influence in banking systems. We question whether the development of African regional foreign banks, also called Pan-African banks, influences financial inclusion of firms and households. To this end, we combine the World Bank Global Findex database and the World Bank Enterprise Surveys with a hand-collected database on the presence of regional foreign banks. We find that Pan-African banks presence increases firms’ access to credit and limited evidence that they favor financial access of the middle class by restoring confidence in banks. We suggest that this impact is related to the adoption of an aggressive strategy aiming at gaining market shares rather than through the exploitation of informational and technological advantages. [less ▲]

Corruption and tax compliance: evidence from small retailers in Bamako, Mali

in Applied Economics Letters (2020), 27(5), 366-370

We investigate the impact of corruption on tax compliance using a sample of 700 small business in Bamako, Mali. The main contribution of this paper is to focus on micro-enterprises (including semi-formal ... [more ▼]

We investigate the impact of corruption on tax compliance using a sample of 700 small business in Bamako, Mali. The main contribution of this paper is to focus on micro-enterprises (including semi-formal and informal ones), while existing works concentrate on large and formal firms. Our results show that (i) even very small firms pay taxes (two-thirds of firms pay taxes in our sample); and, (ii) paying bribes reduces significantly tax compliance. This latter finding is robust (i) to the addition of a set of control variables accounting for other determinants, (ii) to treatment for endogeneity, and (iii) the use of a different proxy for tax compliance. [less ▲]

Long-term finance and entrepreneurship

in Economic Systems (2019), 43(2),

This paper investigates whether long-term finance affects firm entry worldwide. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector in 85 ... [more ▼]

This paper investigates whether long-term finance affects firm entry worldwide. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector in 85 countries over the period 1995-2014. We then analyze whether differences in entrepreneurship are related to the provision of short-term and long-term bank credit. Data on entrepreneurship are extracted from two frequently used databases: the Global Entrepreneurship Monitoring dataset and the Entrepreneurship Database, each of which captures different aspects of firm creation. Econometric results indicate that long-term credit does not stimulate firm entry. By contrast, we find that short-term credit is positively related to firm creation, from birth to registration. Controlling for potential endogeneity by implementing an instrumental variables approach does not affect our conclusions. Our findings suggest that better provision of short-term credit allows entrepreneurs to apply for formal loan instead of having to rely exclusively on informal loans or internal funds. The absence of impact of long-term loans can be explained by the difficulty entrepreneurs face in getting access to long-term credit. [less ▲]

Information sharing, credit booms and financial stability: Do developing economies differ from advanced countries?

in Journal of Financial Stability (2019), 40

This paper analyses the impact of credit information sharing on financial stability, drawing special attention to its interactions with credit booms. A probit estimation of financial vulnerability ... [more ▼]

This paper analyses the impact of credit information sharing on financial stability, drawing special attention to its interactions with credit booms. A probit estimation of financial vulnerability episodes—identified by jumps in the ratio of non-performing loans to total loans—is run for a sample of 159 countries divided into two sub-samples according to their level of development: 80 advanced or emerging economies and 79 less developed countries. The results show that: i) credit information sharing reduces financial fragility for both groups of countries; ii) for less developed countries, the main effect is the direct effect (reduction of NPL ratio once credit boom is controlled), suggesting a portfolio quality effect; iii) credit information sharing also mitigates the detrimental impact of a credit boom on financial fragility but this result holds only for advanced and emerging countries and for household credit booms; and iv) the depth of information sharing has a negative impact on the likelihood of credit booms (but not the coverage of IS). [less ▲]

Household credit and growth: International evidence

E-print/Working paper (2019)

This paper has two main objectives. First, it attempts to distinguish the effects of household and enterprise credit on economic growth for a large sample of developing and developed countries. Second, it ... [more ▼]

This paper has two main objectives. First, it attempts to distinguish the effects of household and enterprise credit on economic growth for a large sample of developing and developed countries. Second, it investigates the channels through which household credit affects economic growth. To do so, a new database covering 143 countries over the period 1995-2014 is employed. Econometric results show that household credit has a negative effect on growth, while business credit has a positive, albeit non significant, impact on growth. The literature provide two possible explanations to justify the negative effect of household credit. On the one hand, household credit expansion can induce more financial fragility. On the other hand, the negative impact of household credit could be explained by its effect on saving behaviors. Results provide some evidence indicating that the negative effect of household credit is more driven by the latter than the former. [less ▲]

Pourquoi la microfinance n’a pas éradiqué la pauvreté?

Article for general public (2018)

Interactions croissantes

Article for general public (2018)

Convergence of credit structure around the world

in Economic Modelling (2018), 68

This paper studies convergence of credit structure worldwide. We hand-collect data on credit to household and firm credit for 143 countries over the period 1995-2014. First, we separately document the ... [more ▼]

This paper studies convergence of credit structure worldwide. We hand-collect data on credit to household and firm credit for 143 countries over the period 1995-2014. First, we separately document the existence of a convergence process of total credit, household credit and firm credit, respectively. Second, we find that convergence of household credit occurs faster than firm credit, inducing a process of convergence of the share of household credit to total credit. Third, convergence occurs faster in low-income countries and in countries with a lower initial level of total credit but slows down after the 2008 global financial crisis. Finally, our data investigation does not support the idea that convergence is driven by changing conditions in developing countries. [less ▲]

Long-term finance and entrepreneurship

E-print/Working paper (2018)

This paper investigates whether long-term finance affects the firm entry across the world. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector ... [more ▼]

This paper investigates whether long-term finance affects the firm entry across the world. We construct a new database on short-term and long-term credit provided by commercial banks to the private sector in 85 countries over the period 1995-2014. We then analyze whether differences in entrepreneurship are correlated with the provision of short-term and long-term bank credit. Data on entrepreneurship are extracted from two frequently used databases: the Global Entrepreneurship Monitoring dataset and Entrepreneurship Database, each of which captures different aspects of firm creation. Econometric results indicate that long-term credit does not stimulate the firm entry. On the contrary, we find that short-term credit exerts a positive impact at each stage of firm creation from activity birth to registration. Our findings are robust to a battery of sensitivity tests, including additional control variables, alternative dependent variables, alternative sample, and changes in econometric specification. Our findings suggest that better provision of short-term credit allows entrepreneurs to apply for a formal loan instead of relying exclusively on informal loans or internal funds, contrary to long-term loans [less ▲]

Implications of loan portfolio concentration in Cambodia

in Economics Bulletin (2017), 37(1), 282-296

This paper explores how the composition of banks' loan portfolios affect banks operating in Cambodia. The implications of loan portfolio concentration has begun to attract attention in recent years ... [more ▼]

This paper explores how the composition of banks' loan portfolios affect banks operating in Cambodia. The implications of loan portfolio concentration has begun to attract attention in recent years. However, existing studies remain focus on developed or emerging countries because data in other developing countries are lacking. In this paper, we fill this gap by investigating the effects of loan portfolio concentration on Cambodian banks' return. We find that sectoral diversification is positively related to banks' returns. In addition, foreign banks and commercial banks are less affected by loan concentration than their counterparts. [less ▲]