"Financial Capitalism's Elusive Quest: Monetary Autonomy & Economic Growth,
1990 - 2005"
Joseph Nathan Cohen, Queens College, City University of New York
Today's financial markets are larger, freer and more powerful than at any point since the Great Depression. Scholars disagree over the degree to which these markets' evolution has helped or hurt developing countries in their quest for economic growth. Global financial markets may facilitate investment, trade and other activities that are important to the economy, but also introduce a volatility that can threaten a country's underlying economic and political order. This article outlines and tests the proposition that countries' economic fortunes partly depend on their governments' capacity to wield monetary power. Monetary power is secured by avoiding balance of payment deficits, maintaining liquid public finances, and reducing one's dependency on the global economy. An analysis of 130 developing countries from 1990 to 2005, which capitalizes on recent developments in the analysis of data with missing observations, suggests that monetary power is a significant influence on economic growth rates, net of other commonly-cited growth determinants, including some forms of economic liberalization. These results are interpreted as suggesting development suffers when either states or markets become too strong, and that countries may be helped by diversifying macroeconomic control among mutually-checking organizational institutions.
"Financial Globalization and Financial Services for the Poor"
Jonathan Conning, Hunter College and The Graduate Center, City University of New York
This talk is based on an empirical study of lenders in microfinance in Latin America and other developing regions. Dr. Conning advances a framework for understanding the roles of for-profit and not-for profit microfinance providers and illuminates the roles of private capital markets, social investors (including philanthropists and governments), and regulatory agencies in the provision of loans and the creation of opportunities for a more efficient and socially responsible globalization of financial services.
In the recent debates surrounding the sub-prime mortgage lending market crisis some have partly defended the fast expansion of new markets for loan securities arguing that opportunities were expanded to hundreds of thousands of first-time home buyers and poor but deserving clients who might otherwise not had access to loans. Others have argued borrowers were tricked and misled by unscrupulous lenders in ways that have ultimately left more poor people trapped under crushing debt burdens. Similar types of debate have have surrounded developing country microfinance for many years where one camp has argued that the only way to expand financial services on the vast scale needed to reach the potential market of hundreds of millions of under-serviced clients is to demonstrate that micro-finance can be run as a business profitably enough to attract large investments from private global capital markets. The recent large and lucrative IPO of shares in Mexico's Compartamos bank -- a for-profit bank established out of a non-profit and donor-funded organization specialized in making small loans to poor and mostly female borrowers -- has been held up as illustrating microfinance's ability to tap into private global capital markets. It has however also fanned the flames of controversy. This paper addresses issues in these important debates through an empirical and theoretical analysis of microfinance lenders from around the world.
About the Speakers:
Joseph Nathan Cohen is as Assistant Professor of Sociology at Queens College, and a recent graduate of Princeton University. His research interests include contemporary capitalism, the modern state, social order and breakdown, international finance, development policy and quantitative macrosociology.
Jonathan Conning is Associate Professor of Economics at Hunter College and a member of the doctoral faculty at The Graduate Center. He is a graduate of Yale University and recently returned from a Fulbright Visiting Fellowship at the Centro de Economia Aplicada of theUniversity of Chile. His research interests are in Development Economics, Political Economy and applied microeconomic theory.