Author : Hazem Al Samman, Chadi Azmeh
This study investigates the influence of financial liberalization on economic growth in developing countries indirectly through their effect on financial development. It selects the size and activity of the financial system as indicators of financial development.The General agreement on Trade and Services (GATS) is a very useful option for developing countries to consolidate their financial sector reform to give foreign investors more certainty about financial investment opportunities in the economies of developing countries.
This study chooses the level of commitments taking by developing countries in the GATS in banking sector as a measure of financial liberalization. The main objective is to examine the effect of developing countries financial liberalization commitments at the GATS on economic growth through their effect on the size and activity of the financial sector. According to the analysis conducted, the results show no real effect of the level of commitments taking by developing countries in the GATS on Economic Growth through their effect on the size and activity of financial development. Even though the effect of financial development on economic growth is positive, the effect of financial liberalization through the GATS on financial development is almost zero.
Keywords: Financial Liberalization, Economic Growth, Developing Countries, GATS, Financial Development.
JEL Classifications: F65, O16
Link to read full paper : http://www.econjournals.com/index.php/ijefi/article/view/2089
Author : Moutasem Shafa’amry
Author : Chadi Azmeh , Hazem Al Samman and Sulaiman Mouselli
This study investigates the impact of financial liberalization on economic growth through its effect on the size and activity of the financial sector in a set of developing countries. We use the relative number and share of Foreign banks as proxies for financial liberalization and liquid liabilities and claims on private sector as share of GDP as proxies for the financial development. We find a negative real effect of the level of Foreign banks entry on the size and activity of financial development. However, the effect of financial development on economic growth is positive. This result contradicts the first component of Levine’s theory that Foreign bank’s entry has positive effect on financial development but confirms the second component that financial development has positive effect on economic growth. Our result is also consistent with Ghosh who finds that a greater banking sector openness reduces economic growth in developing countries.
|International Business Management
|Year: 2017 | Volume: 11 | Issue: 6 | Page No.: 1289-1297
Link to read full paper : http://medwelljournals.com/abstract/?doi=ibm.2017.1289.1297
Author : Chadi Azmeh
This study investigates the impact of foreign banks entry on financial development in the MENA countries. We use the relative number of foreign banks as proxy for foreign banks entry, and liquid liabilities and claims on private sector as share of GDP as proxies for the financial development. We find a positive long-term and significant effect of foreign banks entry on the size and activity of financial development. We also find that the effect of foreign banks entry depends on the time period and the level of economic development. This result seems to suggest that MENA countries should not be taken as one group when studying the impact of financial sector reform on financial development. The impact of foreign bank entry is positive for the 10 richest MENA countries, while it is negative (but not statistically significant) or negligible for the group of less developed MENA countries. The last result indicates that there is a cherry picking phenomenon in less developed MENA countries. The negative effect of foreign banks cherry picking is diminished over time, since the period 2005-2014 show more positive impact of foreign bank entry on financial development, than the period 1995-2004. This result gives evidence that foreign banks need time to overcome informational disadvantage caused by geographical and cultural distance, to expand their lending into soft information borrowers, and to realize the expected positive effect of its entry on financial development in poorest MENA countries.
Keywords: foreign bank entry, financial development, cherry picking, MENA
JEL classifications: F65, O16
Link to read full paper : https://www.tandfonline.com/doi/abs/10.1080/23322039.2018.1452343
Conference Paper · December 2014