IDEAS home Printed from https://ideas.repec.org/a/pkp/teafle/v9y2022i1p49-68id2990.html
   My bibliography  Save this article

How Does Financial Development Affect Economic Growth Volatility? Evidence from a Penalized Panel Quantile Regression

Author

Listed:
  • Manel MAZIOUD

Abstract

This paper aims to examine the effect of financial development on economic growth volatility for a sample of 63 countries during the period 1996-2016. Previous studies have reported mixed and inconclusive results regarding such an effect. I ascribe these controversial findings to the limitations of the ordinary least squares (OLS) regression and adopt the method of quantile regression with panel data as developed in Canay (2011). This methodological contribution allows us to test whether the effect of financial development varies across the full distribution, especially at the extreme quantiles of economic growth volatility. Unlike OLS regression, quantile regression captures the whole picture of the relationship between financial development and economic growth volatility by estimating the effect at each quantile of the distribution. Overall, our empirical results show that the effect of financial development on economic growth volatility is negative. However, this effect appears to not be uniform across the quantiles of the economic volatility distribution. This paper sheds more light on the association between financial development and economic growth volatility.

Suggested Citation

  • Manel MAZIOUD, 2022. "How Does Financial Development Affect Economic Growth Volatility? Evidence from a Penalized Panel Quantile Regression," The Economics and Finance Letters, Conscientia Beam, vol. 9(1), pages 49-68.
    • Handle: RePEc:pkp:teafle:v:9:y:2022:i:1:p:49-68:id:2990
    as

    Download full text from publisher

    File URL: https://archive.conscientiabeam.com/index.php/29/article/view/2990/6441
    Download Restriction: no
    File URL: https://archive.conscientiabeam.com/index.php/29/article/view/2990/6569
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Haojue Zhang & Yifu Sun & Changyu Meng, 2023. "Sustainable Urban Competitiveness from a Financial Development Perspective: An Empirical Study of China," Sustainability, MDPI, vol. 15(5), pages 1-18, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pkp:teafle:v:9:y:2022:i:1:p:49-68:id:2990. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dim Michael (email available below). General contact details of provider: https://archive.conscientiabeam.com/index.php/29/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.