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" Financial structure, investment, and economic development a flow of funds analysis of emerging countries "
Cornelia Staritz
A. Shaikh
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Latin Dissertation
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| Language of Document
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English
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| Record Number
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54901
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| Doc. No
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TL24855
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| Call number
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3388865
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| Main Entry
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Cornelia Staritz
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| Title & Author
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Financial structure, investment, and economic development a flow of funds analysis of emerging countries\ Cornelia Staritz
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| College
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New School University
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| Date
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2008
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| Degree
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Ph.D.
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| student score
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2008
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| Page No
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153
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| Abstract
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This dissertation constructs data on financial structure using flow of funds accounts and analyzes the effects of financial structure on investment for eight (mainly) emerging countries (South Africa, South Korea, India, China, Mexico, Chile, Venezuela, Tunisia). The focus is on four questions: Which financial structures occur in emerging countries? Are there differences between emerging and developed countries and within the emerging countries analyzed? Have there been any trends which could support a convergence towards more market-based financial systems? Does financial structure have an effect on investment? A database on financial structure is built for emerging countries which is used to examine actual financial patterns. It is empirically examined how investment is financed by analyzing the patterns of sources and uses of funds in the non-financial corporate sector. Significant differences are found on the sources and uses side within the countries analyzed and compared to developed countries. The database is further used to examine the impact of financial structure on investment. Extending Minsky's investment model and using time series data the relationship between flow of funds and investment is empirically examined as well as an investment function is developed and estimated. In the investment function traditional variables are combined with a financialization and a financial structure variable. The following conclusions can be drawn: First, although, a straightforward classification is not possible, the financial systems of South Africa, Chile and Venezuela can be roughly classified as market-based and the ones of China, India and South Korea as bank-based. Second, there are important differences in the extent to which total sources are used for investment. Third, the convergence hypothesis can generally not be supported but there is a trend towards more market finance. Fourth, compared to developed countries internal finance is less and market (especially equity) finance more important in financing investment. These unexpected observations can be explained by policy changes during the 1990s. Fifth, financial structure has important effects on investment but the relationship differs across financial systems. Sixth, the trend towards more market-based financial systems in emerging countries is problematic as these systems might be less efficient in supporting investment.
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| Subject
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Social sciences; Financial structure; Investment; Flow of funds; Economic development; Emerging countries; Economics; 0501:Economics
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| Added Entry
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A. Shaikh
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New School University
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