Linkages between Sectoral Output Growth and Financial Development in Nepal
AbstractA feature of the recent period of output growth in Nepal is that growth has been uneven across sectors. While the services sector has been expanding, the agricultural and manufacturing sectors have growing much more slowly. In this paper we attempt to explain this fact by investigating the linkages between financial development and sectoral output growth in a vector-autoregression (VAR) analysis. We find that the services sector reacts strongly to increases in domestic credit, while agriculture and manufacturing are largely unaffected. We interpret this finding in the context of a two sector-growth model, by Schneider and Tornell (2004), where credit constraints and the access to international capital markets play a central role. We also discuss the importance of our findings for the goal of poverty alleviation.
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.
Bibliographic InfoArticle provided by Nepal Rastra Bank, Research Department in its journal NRB Economic Review.
Volume (Year): 24 (2012)
Issue (Month): 2 (October)
Financial development; growth; agriculture; poverty;
Find related papers by JEL classification:
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O53 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
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.:
- Ganesh Kumar Shrestha, 2004. "Financial Sector Reforms in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 16, pages 75-90, April.
- Shalik Ram Sharma, 2003. "Microfinance Against Poverty : The Nepalese Scenario," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 15, pages 166-190, April.
- Aaron Tornell & Frank Westermann & Lorenza Martinez, 2003. "Liberalization, Growth, and Financial Crises: Lessons from Mexico and the Developing World," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 1-112.
- Aaron Tornell & Frank Westermann (ed.), 2005.
"Boom-Bust Cycles and Financial Liberalization,"
MIT Press Books,
The MIT Press,
edition 1, volume 1, number 9780262201599, January.
- Barry Eichengreen & Poonam Gupta, 2009.
"The Two Waves of Service Sector Growth,"
NBER Working Papers
14968, National Bureau of Economic Research, Inc.
- Min B. SHRESTHA & Khorshed CHOWDHURY, 2007. "Impact of Financial Liberalization on Welfare: Evidence from Nepal," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 7(1).
- Udaya R. Wagle, 2010. "Economic inequality in Nepal: Patterns and changes during the late 1990s and early 2000s," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(5), pages 573-590.
- Demetriades, Panicos O & Luintel, Kul B, 1996. "Banking Sector Policies and Financial Development in Nepal," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 355-72, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr. Bishnu Prasad Gautam).
If references are entirely missing, you can add them using this form.