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 ▲]

The effect of financial fragility on employment

in Economic Modelling (2021)

Financial fragility increases economic uncertainty and restricts credit to firms, leading to lower economic growth and employment. Despite voluminous research on the relation between financial fragility ... [more ▼]

Financial fragility increases economic uncertainty and restricts credit to firms, leading to lower economic growth and employment. Despite voluminous research on the relation between financial fragility and growth, the effect of financial fragility on employment is understudied. Using a global panel for the period 1998–2017, we identify a negative effect of financial fragility on employment, even after accounting for unobserved country heterogeneity. The impact of financial fragility is stronger in the post-crisis period and in more rigid labor markets, and the magnitude of the effect is higher in developing/emerging economies than in developed countries. Nevertheless, this negative effect can be mitigated in countries with a higher level of financial market development. Our results are robust to the use of several robustness tests, including different measures of financial fragility and an instrumental variables approach. [less ▲]

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 ▲]

Control-ownership wedge, board of directors, and the value of excess cash

in Economic Modelling (2014), 39

This study investigates the effects of the separation of control and ownership on the value of cash holdings in publicly listed French firms. It also sheds light on the role of board independence in such ... [more ▼]

This study investigates the effects of the separation of control and ownership on the value of cash holdings in publicly listed French firms. It also sheds light on the role of board independence in such a relation. Theory suggests that investors are more likely to discount the value of excess cash held by firms with low corporate governance. Using the valuation regression of Fama and French (1998), empirical results show that the value of excess cash holdings decreases dramatically with the separation of control and cash-flow rights of the controlling shareholder. This value discount is, however, less pronounced in firms with more independent boards (i.e., boards with more independent directors and separate chief executive officer and chair positions). Our empirical findings support the argument that excess cash contributes less to firm value when minority shareholders are more likely to be expropriated by controlling shareholders. Independent boards seem to be effective in mitigating investors’ concerns about the use of excess cash. Overall, the results provide compelling evidence that cash valuation is largely influenced by corporate governance quality in a concentrated ownership setting. [less ▲]

Inequality, growth and mobility: The intertemporal distribution of income in European countries 2003--2007

in Economic Modelling (2013), 35(C), 931-939

This paper exploits EU Statistics on Income and Living Conditions longitudinal data 2003–2007 to describe the intertemporal distribution of income in twenty-six European countries prior to the onset of ... [more ▼]

This paper exploits EU Statistics on Income and Living Conditions longitudinal data 2003–2007 to describe the intertemporal distribution of income in twenty-six European countries prior to the onset of the Great Recession. We document levels, inequality and progressivity in the distribution of year-on-year income gains and losses and examine the relationship of these with inequality and poverty indicators. New Member States have typically seen individual incomes grow faster than other EU countries. Income gains were disproportionately pro-poor in all countries. We therefore observe regression to the mean both among EU countries and among individuals within countries. However, short-run income mobility does not significantly reduce inequality of time-averaged incomes. Potential issues about cross-country comparability of the data and the short period under consideration call for caution in interpreting our results, however. [less ▲]

Vintage technology, optimal investment and 2 technology adoption

in Economic Modelling (2006)

In this paper, we study a vintage technology model under a market equilibrium setting. In this model, firms can invest not only on new vintage technology, but also on existing ones. We first generalize ... [more ▼]

In this paper, we study a vintage technology model under a market equilibrium setting. In this model, firms can invest not only on new vintage technology, but also on existing ones. We first generalize previous partial equilibrium settings and, second, incorporate the adoption problem into a vintage framework. [less ▲]