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Quantile Parameter Heterogeneity in the Finance-Growth Relation: The Case of OECD Countries

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  • Sinem Guler Kangalli Uyar
  • Umut Uyar

Abstract

This paper seeks to investigate the effect of financial development on growth in OECD countries during 1999-2014. The aim of the analysis is to study the dependence of growth on given financial development indicators along quantiles of the conditional growth distribution, taking into account the effect played by each country over time. For the purpose of the empirical analysis, it performed the instrumental variable quantile regression panel data (IV-QRPD) model suggested by Powell (2016). The findings of IV-QRPD model indicated that the effect of finance on growth is changing along quantiles of the conditional growth distribution. That is to say, we provide some evidence that high-growth OECD countries react to the changes in financial development less than low-growth countries.

Suggested Citation

  • Sinem Guler Kangalli Uyar & Umut Uyar, 2018. "Quantile Parameter Heterogeneity in the Finance-Growth Relation: The Case of OECD Countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(1), pages 92-112.
    • Handle: RePEc:prg:jnlpep:v:2018:y:2018:i:1:id:646:p:92-112
    DOI: 10.18267/j.pep.646
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    More about this item

    Keywords

    financial development; economic growth; panel quantile regression; instrumental variable;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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