Who Benefits from Financial Development? New Methods, New Evidence
AbstractThis paper takes a fresh look at the impact of financial development on economic growth by using recently developed kernel methods that allow for heterogeneity in partial effects, nonlinearities, and endogenous regressors. Our results suggest that while the positive impact of financial development on growth has increased over time, it is also highly nonlinear with more developed nations benefiting while low-income countries do not benefit at all. We also conduct a novel policy analysis that confirms these statistical findings. In sum, this set of results contributes to the ongoing policy debate as to whether low-income nations should scale up financial reforms.
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Bibliographic InfoPaper provided by University of Miami, Department of Economics in its series Working Papers with number 2013-07.
Length: 58 pages
Date of creation: 15 Oct 2012
Date of revision:
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Country heterogeneity; financial development; growth; nonlinearities; nonparametric regression; irrelevant variables;
Other versions of this item:
- Henderson, Daniel J. & Papageorgiou, Chris & Parmeter, Christopher F., 2013. "Who benefits from financial development? New methods, new evidence," European Economic Review, Elsevier, vol. 63(C), pages 47-67.
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-02-03 (All new papers)
- NEP-FDG-2013-02-03 (Financial Development & Growth)
- NEP-MFD-2013-02-03 (Microfinance)
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