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Patterns and Drivers of Financial Sector Growth in the Digital Age: Insights from a Study of Industrialized Economies

Author

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  • Khuong Vu

    (National University of Singapore, Singapore)

  • Simplice Asongu

    (Johannesburg, South Africa)

Abstract

The financial sector in advanced economies has undergone significant evolution driven by restructuring, globalization, and the digital revolution, which have profoundly shaped its developmental dynamics. This study investigates the forces behind the growth and convergence of the financial sector across 13 advanced economies from 2000 to 2015, focusing on the effects of digital transformation. The investigation unveils several noteworthy findings concerning the financial sector. First, most nations experienced substantial growth in value-added, coupled with a significant decrease in employment and robust advancements in labor productivity. Next, the primary drivers of labor productivity growth and convergence across many economies were driven by total factor productivity, labor quality, and digital transformation. Lastly, digital transformation not only directly contributed to the augmentation of labor productivity, as quantified through growth accounting estimation, but also wielded a considerable impact on the expansion of total factor productivity and the streamlining of the workforce.

Suggested Citation

  • Khuong Vu & Simplice Asongu, 2023. "Patterns and Drivers of Financial Sector Growth in the Digital Age: Insights from a Study of Industrialized Economies," Working Papers 23/049, European Xtramile Centre of African Studies (EXCAS).
    • Handle: RePEc:exs:wpaper:23/049
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    Cited by:

    1. Li, Pingrui & Zhao, Xu, 2024. "The impact of digital transformation on corporate supply chain management: Evidence from listed companies," Finance Research Letters, Elsevier, vol. 60(C).

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    More about this item

    Keywords

    financial sector; productivity; digital transformation; innovation; catchup; industrialized economies;
    All these keywords.

    JEL classification:

    • C20 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - General
    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • N57 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - Africa; Oceania

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