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Banking Sector Openness and Economic Growth

Ignacio Hernandez's picture

In a new working paper, our own Nihal Bayraktar and Yan Wang look at the links between banking sector openness and economic growth.


Banking sector openness may directly affect growth by improving the access to financial services and indirectly by improving the efficiency of financial intermediaries, both of which reduce the cost of financing, and in turn, stimulate capital accumulation and economic growth. The objective of the paper is to empirically reinvestigate these direct and indirect links, using a more advanced econometric technique (GMM dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results confirm the presence of direct and indirect links, and thus provide support for countries planning to open their banking sector for international competition.


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Submitted by Dr. Sidney Okolo on

From the desk of Dr. Sidney O. Okolo: Professor, Business Consultant, and Developing Countries Expert…

Please allow me some time to discuss the problems and probable solutions of developing countries. If addressed now will eliminate waste and help promote a permanent peace in the developing countries. I have written to USA senate chairman for foreign affairs, Senator Lugar and have spoken with Senator Obama just before his trip to Africa on the importance of adopting and implementing my “COMMON SENSE ECONOMIC AND MARKET STRUCTURE MODEL FOR DEVELOPING COUNTRIES, along with the GODWIN'S LEADERSHIP MODEL FOR DEVELOPING COUNTRIES. These models are tailored to developing countries, and were primary concepts in my dissertation. Using these models will enhance the leadership and economy of the developing countries. Most of the times in developing countries, rebellion begins when the government neglects certain group of people. When people are deprived of the necessities of life while the other group has it all because of their ethnicity and religion, it creates tensions that lead to a "time-bomb" ready to explode. These most times cause conflicts that are attributed to hatred, sabotage, riots, revolution, and deaths. This is common in the developing countries where corruptions have played a role due to self-centeredness on the part of the leaders. Leaders therefore resort to intimidation of their citizens and thereby control these countries by coercion. According to Kretzschmar (2002), “developing countries are often plagued with leadership problems in government, business, churches, and civil society” (p. 42). Ginols and Bhagwati (1976) have purported that "most developing countries are excessively dependent on foreign funds or aid, which leaves them unable to escape the poverty trap by their own means" (as cited by Altunbas & Gadanecz, 2003, p. 1). In a case of ethnic or sectarian conflicts, resolution begins with the leaders. In developing countries, noting that most leaders' ways of thinking and behavior are based on their ethnicity, beliefs, religion, culture, social classes, and assumption of supremacy is a beginning of addressing the problems. Igein (2003) asserted that, "economic advancements have been fractured or negated by social, economic or political conflicts" (p. 24). Coaching and mentoring African leaders without bias and favoritism is the key commodity to probable solution. As an expert in developing countries, applying “A COMMON SENSE ECONOMIC AND MARKET STRUCTURE MODEL FOR DEVELOPING COUNTRIES”, along with the GODWIN'S LEADERSHIP MODEL FOR DEVELOPING COUNTRIES to developing countries will be an appropriate thing to do at this time of economic and leadership crisis and disturbances in those regions. I also suggest that World Bank should use these models to keep these developing countries in check, by requesting that in order to receive funding or foreign aid, that they pledge to use and implement my “COMMON SENSE ECONOMIC AND MARKET STRUCTURE MODEL FOR DEVELOPING COUNTRIES” along with the GODWIN'S LEADERSHIP MODEL FOR DEVELOPING COUNTRIES. These models side by side with check and police these developing countries’ effectiveness and efficiency regarding how they make improvements in their poverty and stability. Dr. Sidney O. Okolo, PhD. Organization & Management Professor, Grand Canyon University Managing Director, Business consultant Services International Business Associates, Inc. [email protected] [email protected] Phone: (312) 671-4721; Fax: (708) 891-4721

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