Testing the Finance-Growth Link: is There a Difference Between Developed and Developing Countries?
AbstractWe revisit the evidence of the existence of a long-run link between financial intermediation and economic growth, by testing of cointegration between the growth rate of real GDP, control variables and three series reflecting financial intermediation. We consider a model with a factor structure that allows us to determine whether the finance-growth link is due to cross countries dependence and/or whether it characterises countries with strong heterogeneities. We employ techniques recently proposed in the panel data literature, such as PANIC analysis and cointegration in common factor models. Our results show differences between the developed and developing countries. We run a comparative regression analysis on the 1980-2006 period and find that financial intermediation is a positive determinant of growth in developed countries, while it acts negatively on the economic growth of developing countries.
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Bibliographic InfoPaper provided by CEPII research center in its series Working Papers with number 2007-24.
Date of creation: Dec 2007
Date of revision:
financial intermediation; panel;
Other versions of this item:
- Gilles Dufrenot & Valerie Mignon & Anne Peguin-Feissolle, 2010. "Testing the finance-growth link: is there a difference between developed and developing countries?," Economics Bulletin, AccessEcon, vol. 30(3), pages 1794-1807.
- Gilles Dufrénot & Valérie Mignon & Anne Peguin-Feissolle, 2008. "Testing The Finance-Growth Link: Is There A Difference Between Developed And Developing Countries?," Working Papers halshs-00348350, HAL.
- Gilles Dufrénot & Valérie Mignon & Anne Peguin-Feissolle, 2010. "Testing the finance-growth link: is there a difference between developed and developing countries?," Working Papers halshs-00536160, HAL.
- C50 - Mathematical and Quantitative Methods - - Econometric Modeling - - - General
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- O50 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-02-23 (All new papers)
- NEP-DEV-2008-02-23 (Development)
- NEP-FDG-2008-02-23 (Financial Development & Growth)
- NEP-FMK-2008-02-23 (Financial Markets)
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.:
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"Exploring the finance-real economy link in U.S.: Empirical evidence from Panel Unit Root and Cointegration Analysis,"
23531, University Library of Munich, Germany.
- Abdou-Aziz Niang & Abdoulaye Diagne & Marie-Claude Pichery, 2011. "Exploring the finance-real economy link in U.S.: empirical evidence from panel unit root and cointegration analysis," Empirical Economics, Springer, vol. 40(1), pages 253-268, February.
- Bangake, Chrysost & Eggoh, Jude C., 2011. "Further evidence on finance-growth causality: A panel data analysis," Economic Systems, Elsevier, vol. 35(2), pages 176-188, June.
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