In Question 1: The Variable G Domestic Credit To Private Sec

In Question 1 The Variable G Domestic Credit To Private Sector By Ba

In Question 1, the variable G. Domestic credit to private sector by banks (% of GDP) [BNK] can be found in Database 1, rather than Database 2. The question has been corrected to reflect this. PLEASE DO NOT USE ANOTHER VARIABLE INSTEAD. Q1: First initial of surname name: U of first name: I Q2: a) birthday: 1995.11.19 part 2: first letter of first name: H first letter of surname: Z excel and word CITY, UNIVERSITY OF LONDON - DEPARTMENT OF ECONOMICS EC3028 - Money and Banking COURSEWORK ASSIGNMENT You must answer both questions according to their instructions.

The required data can be downloaded from the World Development Indicators website in Excel format. The exact websites will be identified in each question. Submissions are due on Moodle by 4PM on Thursday 14 December 2017 (early submissions will be allowed). Your submission must include (i) two separate data and computation files in Excel, one for each question AND (ii) two separate written reports of your findings (including all relevant graphs and plots) in either Word or PDF format, one for each of the two questions. Only the written reports will be marked but the data files are essential in order to verify the validity of your data and calculations (at the marker’s discretion).

Instructions on how to upload your submissions will appear on Moodle and will also be discussed in a tutorial session. Each question will be marked out of 100 percent and your overall mark will be scaled back to be worth 20% of your module mark. Question 1: Economic theory suggests that financial intermediaries, and particularly banks, are essential for chanelling resources towards investment, which in turn fuels economic growth. In this question, you will use statistical techniques to investigate whether this relationship holds for developing countries. The variables needed to conduct your research are may be found on the following two websites.

I: II: These websites can be accessed by cutting and pasting the links into your browser. Database I contains variables A-F, while Database II contains variables G and H. (The abbreviations in square brackets will be used to provide instructions in parts (b)-(e) of this question): A. GDP per capita growth (annual %) [GRO] B. GDP per capita, PPP (constant 2011 international $) [PPP] C. Trade (% of GDP) [TRD] D. School enrollment, secondary (% net) [SSE] E. General government final consumption expenditure (% of GDP) [GOV] F. Inflation, GDP deflator (annual %) [INF] G. Domestic credit to private sector by banks (% of GDP) [BNK] H. Investments financed by banks (%) [PIB] huzhitian huzhitian (a) From the WDI website, choose 20 countries that satisfy all of the following criteria: i Each country has a positive entry for item B in the year 2000. ii Each country has at least 2 observations for each of the data series A and C-G between the years 2000 and 2015.

However, see the note at the end of this question. iii Each country has at least one observation on variable H for the period. Note that these data are reported only for countries that would be considered developing or emerging and this in line with the basis for your study, which is to investigate the effect of financial intermediation on growth for such countries. iv At least one country must have a name that begins with the first initial of your first name and at least another country must have a name that begins with the first initial of your family name. Students with either a first name or a surname beginning with the following initials might find it difficult to pick countries that satisfy all or more of the above criteria: F, H, J, O, Q, R, V, W, X, Y, Z. These students may use the second letter of the corresponding names. Explain the basis for your choice of the other 18 countries. Note that trying to create a sample that spans the globe geographically may sound like a good idea to many students but it might equally reflect superficial thinking. [10 percent] (b) Download and save (in Excel format) (i) the value of item B in 2000 and (ii) all the annual data that are available on the remaining variables A and C-H for each of your chosen countries over the period. i Arrange the data in 20 matrices, one for each country in your sample. For each country, you should have a matrix with the variables A-H along the columns and, for variables A and C to H, yearly data along the rows, while for variable B, you will have a single observation for the year 2000. ii For each variable A and C to H, calculate its average value over the years over which data are available. Do this for each of the 20 countries. iii Construct a new matrix which has countries along the rows and average values of variables A and C to H along the columns. To this matrix add an extra column which lists the value of B for each country. You should now have a single 20x8 matrix. This is the matrix that you need to submit, both as part of your final report (Word or PDF format) and in Excel format. i: indonesia u: uganda … Explain the basis for your choice of the other 18 countries. For your Word or PDF report, the above matrix should be copied and pasted as a 20x8 table. Label each row with the country name and each column with the abbreviation associated with it in square brackets. [10 percent] (c) Using data from the 20x8 matrix in Excel format, calculate the correlation coefficient between the variables BNK and PIB. Report this in your Word or PDF file. [5 percent] (d) Using the same 20x8 matrix, draw two scatter plots (i) between GRO and BNK and (ii) between GRO and PIB. Copy and paste this plot on your report and discuss the nature of the relationship that your plots suggest between economic growth and indicators of banking sector activity, for the countries of your sample. Do the two plots reinforce each other or contradict each other and does this comparison reflect your answer to part (a)? [15 percent] (e) Consider the following regression equation: GRO = a + b1PPP + b2BNK + b3TRD + b4SSE + b5GOV + b6INF + u What sign, if any, do you expect each of the coefficients b1 to b6 to take? Explain your reasons. Answer this part in your report. [20 percent] (f) Using software of your choice, estimate the coefficients of the above regression equation using the relevant data from your 20x8 Excel matrix. Transfer the results of your econometric analysis to the report file. Discuss and interpret (as relevant) your findings on each coefficient b1 to b6. [20 percent] (g) Now estimate an alternative regression: GRO = a + b1PPP + b2PIB + b3TRD + b4SSE + b5GOV + b6INF + u Does the above regression differ from the one estimated in the previous part and if so, in what ways? Explain any differences that you spot. [10 percent] (h) Do your results support the theory outlined at the beginning of the question. If not, discuss possible reasons why you did not obtain the expected results. If yes, discuss possible sources of statistical bias that might be the driving force behind your results. Either way, discuss ways in which your analysis could be improved to be more convincing.