World Bank Lending and Financial Sector Development

World Bank Lending and Financial Sector Development

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Using a new database of World Bank loans to support financial sector development, the authors investigate whether countries that received such loans experienced more rapid growth on standard indicators of financial development than countries that did not. They account for self-selection with treatment effects regressions, and also use propensity score matching techniques. The authors' results indicate that borrowing countries had significantly more rapid growth in M2/GDP than non-borrowers, and swifter reductions in interest rate spreads and cash holdings (as a share of M2). Borrowers also had higher private credit growth rates than non-borrowers in treatment effects regressions, but not in standard panel regressions with fixed country effects. On the whole, however, the results indicate significant advantages for borrowers over non-borrowers in terms of financial development.

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Bibliographic Details
Main Authors: Cull, Robert, Effron, Laurie
Format: Publications & Research biblioteca
Language:English
Published: World Bank, Washington, DC 2005-07
Subjects:ACCOUNTING, ADJUSTMENT LENDING, ADJUSTMENT LOANS, AUDITING, AVERAGE GROWTH, AVERAGE GROWTH RATE, BALANCE SHEETS, BANK LENDING, BANK LOANS, BANK PRIVATIZATION, BANK REGULATION, BANKING, BANKING REFORM, BANKING SECTOR, BANKING SERVICES, BORROWER, BORROWING, BORROWING COUNTRIES, BUDGET SURPLUS, CAPITAL ADEQUACY, CONDITIONALITY, DATA AVAILABILITY, DEBT, DEFICITS, DEPENDENT VARIABLE, DEVELOPING COUNTRIES, DEVELOPING COUNTRY, DEVELOPING WORLD, DEVELOPMENT, DEVELOPMENT INDICATORS, ECONOMIC GROWTH, ECONOMIC REFORM, EMPIRICAL WORK, EQUATIONS, ERROR TERM, ERROR TERMS, ESTIMATED COEFFICIENT, ESTIMATION TECHNIQUES, EVERGREENING, EXOGENOUS VARIABLES, EXPLANATORY VARIABLES, EXPORTS, FINANCIAL CRISES, FINANCIAL DEPTH, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTIONS, FINANCIAL REFORM, FINANCIAL SECTOR, FINANCIAL SECTORS, FIXED EFFECTS, GDP, GROWTH LITERATURE, GROWTH RATE, GROWTH RATES, INFLATION, INSTITUTIONAL DEVELOPMENT, INTEREST RATE, INTEREST RATES, LENDING SERVICES, LOAN, M2, MACROECONOMIC OUTCOMES, MEDIUM TERM, MICROFINANCE, PANEL REGRESSIONS, PER CAPITA GROWTH, POINT ESTIMATES, POLICY AREAS, POLICY CHANGES, POLICY RESEARCH, POLICY VARIABLES, POLITICAL ECONOMY, POSITIVE EFFECTS, PROBLEM BANKS, PROFITABILITY, PUBLIC SECTOR, RAPID GROWTH, REFORM EFFORTS, REFORM PROGRAMS, SECTOR REFORMS, SELECTION BIAS, STATISTICAL ANALYSIS, STRUCTURAL ADJUSTMENT, STRUCTURAL ADJUSTMENT LOANS, STRUCTURAL POLICIES, TAX REVENUES, TECHNICAL ASSISTANCE, TECHNICAL ASSISTANCE LOANS, TRANSITION ECONOMIES, WORLD BANK LENDING, WORLD BANK LOANS,
Online Access:http://documents.worldbank.org/curated/en/2005/07/6027532/world-bank-lending-financial-sector-development
http://hdl.handle.net/10986/8214
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Summary:Using a new database of World Bank loans to support financial sector development, the authors investigate whether countries that received such loans experienced more rapid growth on standard indicators of financial development than countries that did not. They account for self-selection with treatment effects regressions, and also use propensity score matching techniques. The authors' results indicate that borrowing countries had significantly more rapid growth in M2/GDP than non-borrowers, and swifter reductions in interest rate spreads and cash holdings (as a share of M2). Borrowers also had higher private credit growth rates than non-borrowers in treatment effects regressions, but not in standard panel regressions with fixed country effects. On the whole, however, the results indicate significant advantages for borrowers over non-borrowers in terms of financial development.

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