Home-bias Politics, Financial Deregulation and Economic Growth: A Causal Relationship
AbstractWe re-examine the finance-growth nexus using the Chinese financial deregulation experience during the reform period 1981-1998. We use lagged home-bias political variables as instruments for financial deregulation. Dealing with weak instruments by LIML (limited-information maximum likelihood) estimation, we find that financial deregulation has a significant causal effect on economic growth. The result holds up when we control for conditional convergence, other growth determinants, and time and province effects.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 34482.
Date of creation: 15 Oct 2011
Date of revision:
Financial Deregulation; Home-bias Politics; Causality; Growth;
Find related papers by JEL classification:
- O21 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-11-14 (All new papers)
- NEP-DEV-2011-11-14 (Development)
- NEP-FDG-2011-11-14 (Financial Development & Growth)
- NEP-REG-2011-11-14 (Regulation)
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