Time: 13:00-15:00 (UK Time), Wednesday, 28 September 2022
Presenters: Prof. Victor Murinde, SOAS University of London and Dr. Athina Petropoulou, SOAS University of London
Chair: Prof. Victor Murinde, SOAS University of London
Abstract
The FinTech revolution is exploiting recent technological advances to offer novel applications to the entire spectrum of the financial services value chain. However, the revolution is in its early stages and its impact on the behaviour of economic agents, especially households, is not well known. In this paper, we specify and estimate a flow of funds model for the household sector within the Almost Ideal Demand System (AIDS) framework and use the model to examine the impact of financial innovation on the demand for financial assets and on the dynamics of substitution between the assets. We focus on a sample of OECD countries, which constitute the engine of the global economy and provide the largest contributions to growth in recent years, namely UK, EU, US, Japan, China and Australia: the US contributes 20.90% of world GDP, EU 15.53%, China 14.09%, Japan 5.03%, UK 2.90% and Australia 1.45%. We seek to make at least three main contributions. First, using a system of asset demand equations, we offer a new interpretation of the demand for financial assets by households in the context of financial innovation. Second, we impose cross-equation restrictions to uncover substitution effects between FinTech, money and other financial assets. Third, we assess the impact of Covid-19 on household portfolio preferences. Overall, this research sheds light on the impact of financial innovation, specifically FinTech, on household portfolio behaviour in the large economies which shape global economic developments.
Presenters
Prof. Victor Murinde
Professor Victor Murinde (PhD, FRSA, FAcSS) holds the AXA Chair in Global Finance and is the Founding Director of the Research Centre for Global Finance, at the School of Finance and Management, SOAS University of London. He is a Fellow of the Royal Society of Arts; he is also a Fellow of the Academy of Social Sciences. He has contributed over 100 research papers, mainly in the area of banking and finance. According to the UK Research Excellence Framework (REF2014), his research on “Shaping Bank Regulatory Reforms in Africa” was recognized for exceptional impact. He is the Principal Investigator of a DFID-ESRC Research Grant on “Inclusive Finance”, 2016-2021, leading a consortium of: SOAS University of London; University of Birmingham; Columbia University; University of Sussex; University of Nottingham; ODI London; University of Groningen; Laval University; University of Ghana, Legon; & the African Economic Research Consortium (AERC). His other roles include: Chair of Group C (Finance) for the AERC; Council Member of British Institute in Eastern Africa; and Visiting Professor of Financial Economics at the School of Economics, University of Nairobi. He was Chair, Econometric Society Africa Region Standing Committee, 2014-2018. Also, he was the founding Director of the African Development Institute, at the African Development Bank, 2011-2014.
Dr. Athina Petropoulou
Dr. Athina Petropoulou is a Post-Doctoral researcher at the Centre for Global Finance, SOAS University of London under the AXA Chair in Global Finance. She holds and MSc in Finance and a PhD in Finance, both from the University of Bath, UK. Her core research interests lie in the areas of banking, where she investigates credit risk, liquidity risk, efficiency and competition across alternative banking models (e.g., community banks). Her other research interests also include finance and financial econometrics and she has been involved in research projects at the University of Bath and the University of Kent.