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Financial Intermediation versus Direct Financing : A Meta-Analytic Comparison of the Growth-Enhancing Effect

Author

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  • IWASAKI, Ichiro
  • ONO, Shigeki

Abstract

This study is the first meta-analysis to compare financial intermediation and direct financing in terms of their growth-promoting effects. Meta-synthesis of 1693 estimates extracted from 168 previous studies strongly suggest that, in general, financial development has a positive effect on economic growth and the synthesized effect size of the direct financing study exceeding that of the financial intermediation study. The two exceptions are when the average estimation year is limited to 1989 or before and when the target region is restricted to Latin America and the Caribbean. Results from metaregression analysis and tests for publication selection bias show, however, that some synthesis results cannot be reproduced when literature heterogeneity and publication selection bias are taken into consideration.

Suggested Citation

  • IWASAKI, Ichiro & ONO, Shigeki, 2024. "Financial Intermediation versus Direct Financing : A Meta-Analytic Comparison of the Growth-Enhancing Effect," CEI Working Paper Series 2024-01, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2024-01
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    References listed on IDEAS

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    More about this item

    Keywords

    financial intermediation; direct financing; growth-promoting effect; meta-synthesis; meta-regression analysis; publication selection bias;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • P43 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Finance; Public Finance

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