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Financial Structure and Economic Growth

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Author Info
Luintel, Kul B () (Cardiff Business School)
Khan, Mosahid
Arestis, Philip
Theodoridis, Konstantinos () (Cardiff Business School)

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Abstract

Recent empirical work on financial structure and economic growth analyzes multicountry dataset in panel and/or cross-section frameworks and conclude that financial structure is irrelevant. We highlight their shortcomings and re-examine this issue utilizing a time series and a dynamic heterogeneous panel methods. Our sample consists of fourteen countries. Tests reveal that cross-country data cannot be pooled. Financial structure significantly explains output levels in most countries. The results are rigorously scrutinized through bootstrap exercises and they are robust to extensive sensitivity tests. We also test for several hypotheses about the prospective role of financial structure and financial development on economic growth.

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Publisher Info
Paper provided by Cardiff University, Cardiff Business School, Economics Section in its series Cardiff Economics Working Papers with number E2008/3.

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Length: 43 pages
Date of creation: Jan 2008
Date of revision:
Publication status: Published in Journal of Development Economics, 86 (2008) 181-200
Handle: RePEc:cdf:wpaper:2008/3

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Related research
Keywords: Financial Structure; Economic Growth; Co-integration; Bootstrap; Dynamic Heterogeneous Panels;

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Find related papers by JEL classification:
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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References listed on IDEAS
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Cited by:
(explanations, 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.)

  1. Rao, B. Bhaskara & Tamazian, Artur & Singh, Rup & Vadlamannati, Krishna Chaitanya, 2008. "Financial developments and the rate of growth of output: An alternative approach," MPRA Paper 8605, University Library of Munich, Germany. [Downloadable!]
  2. William Milberg, 2007. "Shifting Sources and Uses of Profits: Sustaining U.S. Financialization with Global Value Chains," SCEPA Working Papers 2007-9, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. [Downloadable!]
  3. Philip Arestis & Asena Caner, 2008. "Capital Account Liberalization and Poverty: How Close is the Link?," Working Papers 0811, TOBB University of Economics and Technology, Department of Economics. [Downloadable!]
  4. James B. Ang, 2008. "Finance And Inequality: The Case Of India," CAMA Working Papers 2008-18, Australian National University, Centre for Applied Macroeconomic Analysis. [Downloadable!]
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  5. Marijana Badjun, 2009. "Financial Intermediation by Banks and Economic Growth: A Review of Empirical Evidence," Financial Theory and Practice, Institute of Public Finance, vol. 33(2), pages 121-152. [Downloadable!]
  6. Rao, B. Bhaskara & Tamazian, Artur, 2008. "A model of growth and finance: FIML estimates for India," MPRA Paper 8763, University Library of Munich, Germany. [Downloadable!]
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