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Financial innovation and credit market development

Author

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  • Bhatt, V. V.

Abstract

This paper studies the significance of social innovations - in particular, financial and fiscal innovations. Financial innovations tend to reduce transaction costs and risk, and as a result bring about widening, deepening and integration of capital markets. Such financial development accelerates the pace of economic development through its favorable impact on saving, investment, and output. The relationship between finance and development and the precise role of financial innovations are discussed in Section I, while Section II deals with the nature and characteristics of financial innovations. Section III examines the role of policy intervention in quickening the pace of financial development in the developing countries. The nature and characteristics of financial innovations essential for financial small farm and nonfarm enterprises and for mobilizing resources from middle and low income groups in the developing countries, are illustrated by a case study of an innovative bank in Section IV. Some concluding observations are made in the final section.

Suggested Citation

  • Bhatt, V. V., 1989. "Financial innovation and credit market development," Policy Research Working Paper Series 52, The World Bank.
    • Handle: RePEc:wbk:wbrwps:52
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    Citations

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    Cited by:

    1. Odedokun, M. O., 1996. "Alternative econometric approaches for analysing the role of the financial sector in economic growth: Time-series evidence from LDCs," Journal of Development Economics, Elsevier, vol. 50(1), pages 119-146, June.
    2. P. J. Dawson, 2003. "Financial development and growth in economies in transition," Applied Economics Letters, Taylor & Francis Journals, vol. 10(13), pages 833-836.
    3. Fadzlan Sufian & Fakarudin Kamarudin, 2013. "Efficiency of the Bangladesh Banking Sector: Evidence from the Profit Function," Jindal Journal of Business Research, , vol. 2(1), pages 43-57, June.
    4. Fadzlan Sufian & Fakarudin Kamarudin & Nor Halida Haziaton Mohd Noor, 2012. "Determinants of Revenue Efficiency in the Malaysian Islamic Banking Sector محددات كفاءة الإيرادات في القطاع المصرفي الماليزي," Journal of King Abdulaziz University: Islamic Economics, King Abdulaziz University, Islamic Economics Institute., vol. 25(2), pages 199-228, July.
    5. P.J. Dawson, 2008. "Financial development and economic growth in developing countries," Progress in Development Studies, , vol. 8(4), pages 325-331, October.
    6. Md. Qamruzzaman & Jianguo Wei, 2019. "Financial Innovation and Financial Inclusion Nexus in South Asian Countries: Evidence from Symmetric and Asymmetric Panel Investigation," IJFS, MDPI, vol. 7(4), pages 1-27, October.
    7. Leite, Rodrigo & Mendes, Layla & Camelo, Emmanuel, 2024. "Innovating microcredit: how fintechs change the field," Journal of Economics and Business, Elsevier, vol. 128(C).
    8. Adegbola Olubukola Otekunrin & Tough Chinoda & Kudzanai Matowanyika, 2021. "The Nexus Between Economic Growth, Financial Development, Financial Inclusion and Financial Innovation in Africa," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(8), pages 672-681, August.
    9. Ta Nhat Linh & Hoang Thanh Long & Le Van Chi & Le Thanh Tam & Philippe Lebailly, 2019. "Access to Rural Credit Markets in Developing Countries, the Case of Vietnam: A Literature Review," Sustainability, MDPI, vol. 11(5), pages 1-18, March.
    10. Alexandr Akimov & Albert Wijeweera & Brian Dollery, 2009. "Financial development and economic growth: evidence from transition economies," Applied Financial Economics, Taylor & Francis Journals, vol. 19(12), pages 999-1008.

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