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Financial Intermediation and Economic Growth: A Semiparametric Approach

In: New Trends in Macroeconomics

Author

Listed:
  • Thanasis Stengos

    (University of Guelph)

  • Zhihong Liang

    (University of Guelph)

Abstract

Summary In this paper we examine the effect of financial development on economic growth in an additive Instrumental Variable (IV)-augmented Partially Linear Regression (PLR) model using panel data of 66 countries for the period 1961-1995. Three common measures of financial development are used. Our results show that the effect of the exogenous component of a financial intermediary development index on economic growth depends greatly on the definition and measurement of that index. Financial development affects growth in a positive but non-linear way using a Liquid Liabilities index and in an almost linear way when using a Private Credit index. The effect becomes ambiguous when a Commercial-Central Bank index is used.

Suggested Citation

  • Thanasis Stengos & Zhihong Liang, 2005. "Financial Intermediation and Economic Growth: A Semiparametric Approach," Springer Books, in: Claude Diebolt & Catherine Kyrtsou (ed.), New Trends in Macroeconomics, pages 39-52, Springer.
    • Handle: RePEc:spr:sprchp:978-3-540-28556-4_3
    DOI: 10.1007/3-540-28556-3_3
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    Citations

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    Cited by:

    1. Ouyang, Yaofu & Li, Peng, 2018. "On the nexus of financial development, economic growth, and energy consumption in China: New perspective from a GMM panel VAR approach," Energy Economics, Elsevier, vol. 71(C), pages 238-252.
    2. Eggoh C. Jude, 2010. "Financial Development And Growth: A Panel Smooth Regression Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 15-33, March.
    3. Mohamed Aydi & Abdelkader Aguir, 2017. "Financial Development and Economic Growth: The Empirical Evidence of the Southern Mediterranean Countries," International Journal of Economics and Financial Issues, Econjournals, vol. 7(3), pages 196-209.
    4. Bose, Niloy & Murshid, Antu Panini & Wurm, Martin A., 2012. "The Growth Effects of Property Rights: The Role of Finance," World Development, Elsevier, vol. 40(9), pages 1784-1797.
    5. James B. Ang, 2008. "A Survey Of Recent Developments In The Literature Of Finance And Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 536-576, July.
    6. Bidisha Mukhopadhyay, 2011. "Structural breaks in finance growth nexus: the study of Indonesia," Journal of Economics and Behavioral Studies, AMH International, vol. 1(1), pages 1-6.
    7. Michiel Bijlsma & Andrei Dubovik, 2014. "Banks, Financial Markets and Growth in Developed Countries: a Survey of the empirical literature," CPB Discussion Paper 266.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    8. repec:prg:jnlpep:v:preprint:id:646:p:1-21 is not listed on IDEAS
    9. 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.

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