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Financial Integration, Financial Dependence and Employment Growth

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  • Nurullah Gur

    (Faculty of Business and Management Sciences, Istanbul Medipol University, Beykoz, Istanbul, Turkey.)

Abstract

In this paper we analyse the effect of financial integration on employment growth. The results show that financial integration increases employment growth relatively more in financially dependent industries when we use de jure measure of financial integration. Using de facto measures of financial integration, we find that international portfolio equity investments and foreign direct investments increase employment growth disproportionately more in industries that are heavily dependent on external finance. But, external debt has no significant effect on employment growth. We also find that the positive effect of financial integration on employment growth disappears in countries with underdeveloped financial system and extractive institutions.

Suggested Citation

  • Nurullah Gur, 2015. "Financial Integration, Financial Dependence and Employment Growth," International Journal of Economics and Financial Issues, Econjournals, vol. 5(2), pages 493-500.
    • Handle: RePEc:eco:journ1:2015-02-22
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    More about this item

    Keywords

    Financial Integration; External Finance; Employment;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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