Credit buildups and the stock market in four East Asian economies
AbstractWe examine the relationship between intermediaries, stock markets, and real activity in four East Asian crisis economies (Indonesia, Korea, Malaysia, and Thailand) using a series of comparative vector autoregressive and error correction models with quarterly data from 1995 through 2010, thus including both the financial crises of 1997–1998 and 2008–2009. Although we find generally positive effects of stock market development and liquidity on growth and investment for all four countries, expansion in traditional measures of financial development do not promote growth, and even have strongly negative effects for Indonesia and Korea. The results from these economies suggest that credit can build up to the point of “saturation,” and that a well-functioning stock market can serve as a growth-promoting outlet for funds as a financial system expands and evolves.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Elsevier in its journal Journal of Macroeconomics.
Volume (Year): 34 (2012)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/622617
Finance and growth; East Asian financial crisis; Credit saturation;
Find related papers by JEL classification:
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- F30 - International Economics - - International Finance - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter L. Rousseau & Paul Wachtel, 1998.
"Equity Markets and Growth: Cross-Country Evidence on Timing and Outcomes, 1980-1995,"
98-09, New York University, Leonard N. Stern School of Business, Department of Economics.
- Rousseau, P. L. & Wachtel, P., 2000. "Equity markets and growth: Cross-country evidence on timing and outcomes, 1980-1995," Journal of Banking & Finance, Elsevier, vol. 24(12), pages 1933-1957, December.
- Levine, Ross, 2005.
"Finance and Growth: Theory and Evidence,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934
- Diamond, Douglas W & Dybvig, Philip H, 1983.
"Bank Runs, Deposit Insurance, and Liquidity,"
Journal of Political Economy,
University of Chicago Press, vol. 91(3), pages 401-19, June.
- Osterwald-Lenum, Michael, 1992. "A Note with Quantiles of the Asymptotic Distribution of the Maximum Likelihood Cointegration Rank Test Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 54(3), pages 461-72, August.
- Greenwood, Jeremy & Jovanovic, Boyan, 1988.
"Financial Development, Growth, And The Distribution Of Income,"
88-12, C.V. Starr Center for Applied Economics, New York University.
- Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
- Jeremy Greenwood & Boyan Jovanovic, 1989. "Financial Development, Growth, and the Distribution of Income," NBER Working Papers 3189, National Bureau of Economic Research, Inc.
- Greenwood, J. & Jovanovic, B., 1990. "Financial Development, Growth, And The Distribution Of Income," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
- Greenwood, J. & Jovanovic, B., 1988. "Financial Development, Growth, And The Distribution Of Income," RCER Working Papers 131, University of Rochester - Center for Economic Research (RCER).
- repec:fth:wobaco:1083 is not listed on IDEAS
- Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
- Jung, Woo S, 1986. "Financial Development and Economic Growth: International Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 34(2), pages 333-46, January.
- Levine, Ross & Zervos, Sara, 1998.
"Stock Markets, Banks, and Economic Growth,"
American Economic Review,
American Economic Association, vol. 88(3), pages 537-58, June.
- Ross Levine & Sara Zervos, . "Stock markets, banks and economic growth ," CERF Discussion Paper Series 95-11, Economics and Finance Section, School of Social Sciences, Brunel University.
- Levine, Ross & Zervos, Sara, 1996. "Stock markets, banks, and economic growth," Policy Research Working Paper Series 1690, The World Bank.
- Papell, David H. & Prodan, Ruxandra, 2006.
"Additional Evidence of Long-Run Purchasing Power Parity with Restricted Structural Change,"
Journal of Money, Credit and Banking,
Blackwell Publishing, vol. 38(5), pages 1329-1349, August.
- Tom Doan, . "RATS programs to replicate Papell and Prodan one and two break unit root tests," Statistical Software Components RTZ00130, Boston College Department of Economics.
- Bell, Clive & Rousseau, Peter L., 2001.
"Post-independence India: a case of finance-led industrialization?,"
Journal of Development Economics,
Elsevier, vol. 65(1), pages 153-175, June.
- Clive Bell & Peter L. Rousseau, 2000. "Post-Independence India: A Case of Finance-Led Industrialization?," Vanderbilt University Department of Economics Working Papers 0019, Vanderbilt University Department of Economics.
- Greenwood, J. & Smith, B.D., 1995.
"Financial Markets in Development, and the Development of Financial Markets,"
RCER Working Papers
406, University of Rochester - Center for Economic Research (RCER).
- Greenwood, Jeremy & Smith, Bruce D., 1997. "Financial markets in development, and the development of financial markets," Journal of Economic Dynamics and Control, Elsevier, vol. 21(1), pages 145-181, January.
- Bencivenga Valerie R. & Smith Bruce D. & Starr Ross M., 1995. "Transactions Costs, Technological Choice, and Endogenous Growth," Journal of Economic Theory, Elsevier, vol. 67(1), pages 153-177, October.
- Ajit Singh, 2008. "Stock Markets in Low and Middle Income Countries," ESRC Centre for Business Research - Working Papers wp377, ESRC Centre for Business Research.
- Demetriades, Panicos O. & Hussein, Khaled A., 1996.
"Does financial development cause economic growth? Time-series evidence from 16 countries,"
Journal of Development Economics,
Elsevier, vol. 51(2), pages 387-411, December.
- Panicos O. Demetriades & Khaled A.Hussein, 1995. "Does Financial Development Cause Economic Growth? Time-Series Evidence from 16 Countries," Keele Department of Economics Discussion Papers (1995-2001) 95/13, Department of Economics, Keele University.
- Steven Radelet & Jeffrey D. Sachs, 1998. "The East Asian Financial Crisis: Diagnosis, Remedies, Prospects," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(1), pages 1-90.
- Rousseau, Peter L. & Vuthipadadorn, Dadanee, 2005. "Finance, investment, and growth: Time series evidence from 10 Asian economies," Journal of Macroeconomics, Elsevier, vol. 27(1), pages 87-106, March.
- Peter L. Rousseau & Paul Wachtel, 2011.
"What Is Happening To The Impact Of Financial Deepening On Economic Growth?,"
Western Economic Association International, vol. 49(1), pages 276-288, 01.
- Peter L. Rousseau & Paul Wachtel, 2009. "What is Happening to the Impact of Financial Deepening on Economic Growth?," Vanderbilt University Department of Economics Working Papers 0915, Vanderbilt University Department of Economics.
- Paul Wachtel & Peter L. Rousseau, 2006. "What is happening to the impact of financial deepening on economic growth?," Working Papers 06-15, New York University, Leonard N. Stern School of Business, Department of Economics.
- Philip Arestis & Panicos O. Demetriades & Kul B. Luintel, 1997.
"Financial Development and Economic Growth: the Role of Stock Markets,"
Keele Department of Economics Discussion Papers (1995-2001)
97/05, Department of Economics, Keele University.
- Arestis, Philip & Demetriades, Panicos O & Luintel, Kul B, 2001. "Financial Development and Economic Growth: The Role of Stock Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(1), pages 16-41, February.
- King, Robert G & Levine, Ross, 1993.
"Finance and Growth: Schumpeter Might Be Right,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(3), pages 717-37, August.
- Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-44, January.
- Geert Bekaert & Campbell R. Harvey & Christian T. Lundblad, 2003.
"Equity market liberalization in emerging markets,"
Federal Reserve Bank of St. Louis, issue Jul, pages 53-74.
- Rousseau, Peter L & Wachtel, Paul, 1998. "Financial Intermediation and Economic Performance: Historical Evidence from Five Industrialized Countries," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 657-78, November.
- Atje, Raymond & Jovanovic, Boyan, 1993. "Stock markets and development," European Economic Review, Elsevier, vol. 37(2-3), pages 632-640, April.
- Rousseau, Peter L. & Xiao, Sheng, 2007. "Banks, stock markets, and China's `great leap forward'," Emerging Markets Review, Elsevier, vol. 8(3), pages 206-217, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wendy Shamier).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.