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This paper seeks to examine the interrelationship between inclusive business, private sector credit and economic welfare in Africa.

The study uses the seemingly unrelated regression, system generalized method of moments and bootstrap quantile regression in a panel of 54 economies in Africa, over the period 2006–2020.

The authors show that countries that provide more credit to the private sector have better incentives to enhance the ease of doing business. The authors find that ease of doing business and domestic credit to the private sector have a positive and significant effect on economic welfare at higher quantile levels. The authors find that ease of doing business substitutes private sector credit to boost economic welfare, while business account complements private sector credit to boost economic welfare. The authors show that the marginal effect of inclusive business on economic welfare is greater in countries that provide more credit to the private sector.

The implication is that countries that focus on developing their private sector (through credit expansion) should be able to encourage or facilitate the inclusion of businesses to achieve a sustainable economic welfare.

The implication is that policymakers should be able to develop their business environment through inclusive financing so as to build business confidence in the society.

The paper examines the interrelationship between inclusive business, private sector credit and economic welfare in Africa.

The purpose of the study is to investigate the correlation between credit supply to government and credit supply to the private sector to determine whether there is a crowding-out or crowding-in effect of credit supply to government on credit supply to the private sector.

The study used data from 43 countries during the 1980–2019 period. The study employed the Pearson correlation methodology to analyze the data.

There is a significant positive correlation between credit supply to government and credit supply to the private sector. There is also a significant positive relationship between credit supply to government and credit supply to the private sector, implying a crowding-in effect of government borrowing on private sector borrowing. The positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the period before the Great Recession, while the positive correlation is weaker and less significant during the Great Recession, and the correlation further weakens after the Great Recession. The regional analyses show that the positive correlation between credit supply to government and credit supply to the private sector by banks is stronger and highly significant in the African region than in the Asian region and the region of the Americas.

There is no evidence on the correlation between credit supply to government and credit supply to the private sector during the Great Recession.

The purpose of this paper is to test the effect of informal finance and trade credit on the performance of private firms.

Based on a survey to private firms in 19 cities, the paper empirically tests the promoting effects of informal finance and trade credit on the performance of private firms in China.

It was found that informal finance and trade credit have positive effects on private firms' performance measured by ROA. The net income reinvestment rate of private firms is positively related to whether or not the firm adopts informal financing or trade credit financing. A private firm having limited access to formal finance is more inclined to rely on self‐funds and is more limited by financing choices. Informal financing and trade credit can relieve the tension of cash flow chain but cannot solve the financing constraints. The empirical results also show that bank credit is still not the main financing choice for private firms and has not yet played a promoting role in private firms' performance and growth. Informal finance is more important to promote performance in manufacturing industry, while trade credit is more effective in wholesale and trading industry. The results show the coexistence viability of informal financing channels and formal financial institutions in China.

The policy implication is the Chinese Government should take careful steps to regulate informal financing sources.

After some theoretical literature, such as Lin and Sun, this paper explores for the first time the effect of informal financing channels on the performance of private firms.

The equation of unified knowledge says that S = f (A,P) which means that the practical solution to a given problem is a function of the existing, empirical, actual realities and the future, potential, best possible conditions of general stable equilibrium which both pure and practical reason, exhaustive in the Kantian sense, show as being within the realm of potential realities beyond any doubt. The first classical revolution in economic thinking, included in factor “P” of the equation, conceived the economic and financial problems in terms of a model of ideal conditions of stable equilibrium but neglected the full consideration of the existing, actual conditions. That is the main reason why, in the end, it failed. The second modern revolution, included in factor “A” of the equation, conceived the economic and financial problems in terms of the existing, actual conditions, usually in disequilibrium or unstable equilibrium (in case of stagnation) and neglected the sense of right direction expressed in factor “P” or the realization of general, stable equilibrium. That is the main reason why the modern revolution failed in the past and is failing in front of our eyes in the present. The equation of unified knowledge, perceived as a sui generis synthesis between classical and modern thinking has been applied rigorously and systematically in writing the enclosed American‐British economic, monetary, financial and social stabilization plans. In the final analysis, a new economic philosophy, based on a synthesis between classical and modern thinking, called here the new economics of unified knowledge, is applied to solve the malaise of the twentieth century which resulted from a confusion between thinking in terms of stable equilibrium on the one hand and disequilibrium or unstable equilibrium on the other.

In spite of being the second largest recipient of foreign direct investment (FDI) in the world, China shows limited evidence of considerable FDI benefits on growth (Fan and Hu; Luo; Ran et al.). Motivated by Alfaro et al.'s model, the purpose of this study is to test whether poor financial market development might be responsible for the relatively low benefits of FDI on growth in China.

The author applies Blundell‐Bond system GMM estimators to a panel of Chinese provinces.

The results indicate that poor financial intermediation does indeed limit the transmission of FDI benefits within the Chinese economy. Moreover, the study reveals preliminary evidence that banks' credits to unproductive state‐owned enterprises (SOEs) constitute poor financial intermediation with negative growth implications. In contrast, credits to small private enterprises are associated with a positive impact of FDI on growth.

The study is constrained by data availability especially for private credit data across provinces.

Two policy implications can be drawn from the empirical findings. First, the direct policy implication is that to ensure positive benefits from FDI in China, domestic financial reforms are crucial. This is an important perspective for making FDI policies. The results also reveal some key priorities of financial reforms. More credits to small private enterprises are an indication of good financial intermediation, while more loans extended to unproductive SOEs signal poor financial intermediation. The priority of reform comes down to tackling the difficult problem of credit misallocation.

This paper provides an alternative perspective to address the weak FDI‐growth relationship found in China. Inspired by Alfaro et al.'s model and the understanding of the problem of Chinese financial markets, the study examines the role of the financial system in the FDI‐growth linkage and reveals how financial market conditions could influence FDI benefits in China.

This paper aims to analyze, using the bank-level data for India from 1991-2007, the effect of financial sector liberalization on the availability of credit to the private sector. The authors specifically ask whether public and private banks deployed resources freed up by reduced state preemption to increase credit to the private sector.

The authors use bank-level data for India from 1991-2007 and difference in difference estimates to analyze how state ownership of banks affected the allocation of credit to the private sector post liberalization, and additionally how the size of fiscal deficit affected this allocation.

The authors find that post liberalization, public banks continued to allocate a larger share of their assets to government securities, or held more cash, than private banks. Crucially, public banks allocated more resources to hold government securities when fiscal deficit was high. The authors rule out profit maximization, need to hold safer assets or the lack of demand for private credit as the possible reasons for the preference of the public banks to hold government securities. The authors suggest that moral suasion or “laziness” is consistent with this behavior.

Our findings suggest that in developing countries, with fewer alternative channels of financing, government ownership of banks, combined with high fiscal deficit, may limit the gains from financial liberalization.

The purpose of this paper is to analyze a particular segment of the US “shadow banking” market and its revival since the recent credit crisis, namely, lending to the private Middle Market, defined as financings of $5-100 million to non-public, unrated operating entities or pools of assets with not more than $50 million in earnings before interest, taxes, depreciation and amortization.

The analysis includes a review survey of a segment of capital markets and primary evidence from direct participation in two examples of actual private, non-bank lending between 2011 and 2012 executed by a Middle Market US investment bank.

While there have been considerable challenges, historically, in providing credit for small-and mid-sized businesses in the USA, private Middle Market capital is (post the recent credit crisis) finding opportunities, notwithstanding, constraints imposed by market and other forces, including systemic crises, cyclical forces and changes in regulatory regimes.

Any generalization is limited due to the absence of disaggregated survey data for the US capital markets and the limited examples examined.

The capital markets segment and non-bank financial institutions examined in this paper are developing as an alternative source of credit/lending from commercial banks for mid-sized companies.

The mid-sized firms financed by the shadow credit market are a significant source of job creation in the US economy making non-bank credit a lifeline to job growth in the financial crisis.

Direct participation is unique to the firms studied. Value is in developing a general framework to analyze different segments of the capital market.

The purpose of the study is to explore the implications of global financial integration on host economies in Sub-Saharan Africa (SSA). The study tests the competing views on the impact of foreign bank penetration on private sector access to credit in developing host economies.

Using data on a panel 25 SSA economies over a period of 22 years from 1995 to 2016, the study employs fixed effects and Prais-Winsten estimations as well as generalized methods of moments (GMM) to test the foreign bank impact.

The findings show support for the hypothesis that global financial integration has positive implications for participating economies. In other words, financial sector liberalization and deregulation leading to the influx of foreign banks has positive implications for access to credit by the private sector in SSA economies. The study also finds other standard determinants of access to credit like lending rate and broad money supply conforming to the existing literature in terms of impact.

Overall, the findings hold relevant implications for banking sector policies and the financial sector in general regarding the priority that policy makers and advisors attach to reforming financial sector policies.

The purpose of this paper is to expand the investor sentiment’s effect on investment efficiency to the layer of “credit financing,” studying whether investor sentiment can affect credit financing level and the inner mechanism of the effect.

The authors obtain firm-level data from the Shanghai and Shenzhen stock markets and using panel estimation techniques examine whether investor sentiment can affect credit financing level and the inner mechanism of the effect.

This paper finds that credit financing plays the role of partial media in the process of investor sentiment affecting investment efficiency. Based on the funds increasing effect, with the high-investor sentiment and increasing credit financing, corporations alleviate the financing constraints, but also provide a convenient for the abuse of corporate funds. So, investor sentiment positively associates with enterprises’ overinvestment, while investor sentiment negatively associates with enterprises’ underinvestment. Relying on the particular system background and property right environment in China, this paper finds that investor sentiment has an effect on the overinvestment of state-owned enterprises and the underinvestment of private enterprises through credit financing channel, while it does not function in the overinvestment of private enterprises. The reason of the difference is that under the soft budget constraint in the country, the credit preference of state-owned enterprises and the creditor’s rights management of banks are partially absent.

By fusing the special financial environment and institutional background, this thesis further includes in the analysis frame the difference in governance effect by credit financing between state-owned and privately owned listed companies, and further analyzes the difference in impact on investment efficiency in enterprises of different natures after investor sentiment has affected enterprise credit financing.

This paper has verified the constraint assumption and deepened the research work on bank credit supply and answered practical questions such as whether the banks in the country exercise supervision function over the listed companies and on which kind of listed companies the supervision function plays a more effective role.

As an unofficial substitution mechanism, bank-enterprise relationship can elevate the investment efficiency by private owned enterprises. Based on the timely research results on credit financing, reference is provided for private listed companies to utilize investor sentiment to improve its investment efficiency.

This paper has proved the specific path which creates the dual effects on resources allocation by investor sentiment, that is, the intermediary transmission in credit financing, clarifying the mechanism of action by which investor sentiment affects the efficiency of enterprise investment and making incremental contribution to the research of how investor sentiment affects the efficiency of enterprise investment.