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Financial Development and Economic Growth: A Meta-Analysis

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Abstract

We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but individual estimates vary a lot. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. While the effect seems to be weaker in poor countries, the effect decreases worldwide after the 1980s. Our results suggest that stock markets support faster economic growth than other financial intermediaries. We find no evidence of publication bias in the literature.

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File URL: http://ies.fsv.cuni.cz/sci/publication/show/id/4831/lang/cs
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Paper provided by Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies in its series Working Papers IES with number 2013/04.

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Length: 37pages
Date of creation: May 2013
Date of revision: May 2013
Handle: RePEc:fau:wpaper:wp2013_04

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Keywords: finance; development; growth; meta-analysis;

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Cited by:
  1. Strieborny, M. & Kukenova, M., 2010. "Investment in Relationship-Specific Assets: Does Finance Matter?," Discussion Paper 2010-38S, Tilburg University, Center for Economic Research.
  2. Kamil Galuscak & Adam Gersl & Marcela Gronychova & Petr Hlavac & Petr Jakubik & Lubos Komarek & Zlatuse Komarkova & Tomas Konecny & Jakub Seidler, 2014. "Stress-Testing Analyses of the Czech Financial System," Occasional Publications - Edited Volumes, Czech National Bank, Research Department, edition 1, volume 12, number rb12/1 edited by Jan Babecky & Roman Horvath, August.

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