What is financial broadening distinguish financial broadening from financial deepening?

Financial Deepening: Financial deepening implies the increase in the share of financial assets in the GDP of country. Financial broadening: Financial broadening means the increase or growth in numbers of instruments and participants in the financial market.

What is meant by financial deepening?

Financial deepening is defined as increases in the ratio of a country’s financial assets to its GDP. Financial asset accumulation simultaneously provides credit to finance real asset accumulation for the development process.

Why do we do financial deepening?

The supply leading hypothesis suggests that financial deepening fuels growth. The existence and development of the financial markets brings about a higher level of savings and investment and enhance the efficiency of capital accumulation.

What facilitates financial deepening?

Capital market development therefore enables financial deepening by enabling the savers to diversify their financial asset basket and the firms to have access to alternative sources of financing.

What is the meaning of financial widening?

Financial widening means offering a wider range of financial goods and services with different maturities, risks and returns from a variety of financial intermediaries while financial deepening relates to the accumulation of financial assets at a faster pace than the accumulation of non financial wealth.

What do you mean by financial deepening and how is it related with economic growth?

Financial deepening is a term used often by economic development experts. Financial deepening generally means an increased ratio of money supply to GDP or some price index. It refers to liquid money. The more liquid money is available in an economy, the more opportunities exist for continued growth.

How financial deepening is related with economic growth?

i.e. financial deepening results mainly at the expense of direct lending in the curb market. As such, they conclude that, in practice, financial deepening is likely to reduce the total real supply of credit available, the quantity of investment, and the rate of economic growth. Thus according to Buffie (1984) “..

How financial deepening is related to economic growth?

Financial deepening can have a macroeconomic effect for a country. Financial deepening generally can increase the ratio of money supply to GDP or some price index. It can have the effect of increasing liquidity. Having access to money can provide more opportunities for investment and growth.

What is the difference between capital deepening and capital widening?

Capital deepening is a situation where the capital per worker is increasing in the economy. Capital widening is the situation where the stock of capital is increasing at the same rate as the labour force and the depreciation rate, thus the capital per worker ratio remains constant.

What is known as broad money?

Broad money is the broadest measure, encompassing narrow money (such as cash and checkable deposits), along with less liquid assets such as certificates of deposit, foreign currencies, money market accounts, marketable securities, Treasury bills and anything else that can be easily converted into cash (but not …

What is the difference between M1 and M2 give an example of each quizlet?

What is the difference between M1 and M2? Give an example of each. M1 represents money that people can gain access to easily and immediately to pay for goods and services (such as cash-on-hand). M2 consists of all the assets in M1 plus several additional assets (such as savings deposits in banks).

What is meant by financial development?

This process of reducing the costs of acquiring information, enforcing contracts, and making transactions resulted in the emergence of financial contracts, markets, and intermediaries. …

What is the difference between capital widening and capital deepening?

Capital widening involves greater investment to make use of existing technology and increase the amount of capital available. Capital deepening attempts to increase output through better technology and higher output per worker, for example, new technology which makes capital more productive.

What is the meaning of financial deepening?

Financial deepening is a term used by economists to refer to increasing provision of financial services. It can refer both a wider choice of services and better access for different socioeconomic groups. Financial deepening can have an effect on both individuals’ and societies’ economic situations. 1 Features.

What is the relationship between capital widening and saving rate?

Thus, in general, the higher the saving rate, the higher the funds available for productive use (investment). Capital widening is when the capital stock increases at an equal rate as the increase of the labor force. As a result, the capital-per-worker ratio remains constant.

What is capital widening in macroeconomics?

Capital widening is when the capital stock increases at an equal rate as the increase of the labor force. As a result, the capital-per-worker ratio remains constant. For example, if the labor force increases by 5\%, the capital stock increases by 5\%.