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Banking sector openness and economic growth

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  • Bayraktar, Nihal
  • Wang, Yan
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Abstract

Banking sector openness may directly affect growth by improving the access to financial services and indirectly by improving the efficiency of financial intermediaries, both of which reduce the cost of financing, and in turn, stimulate capital accumulation and economic growth. The objective of the paper is to empirically reinvestigate these direct and indirect links using a more advanced econometric technique (GMM dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results confirm the presence of direct and indirect links, and thus provide support for countries planning to open their banking sector for international competition.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 4019.

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Date of creation: 01 Oct 2006
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Handle: RePEc:wbk:wbrwps:4019

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Keywords: Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Achieving Shared Growth; Financial Crisis Management&Restructuring;

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  28. repec:fth:wobaco:1083 is not listed on IDEAS
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Citations

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Cited by:
  1. Mikel Larreina, 2008. "Financial centres in peripheral regions: the effect of the financial services industry on regional economy - the case of the Scottish Financial cluster," CRIEFF Discussion Papers, Centre for Research into Industry, Enterprise, Finance and the Firm 0805, Centre for Research into Industry, Enterprise, Finance and the Firm.
  2. Nam Jeon, Bang & Wu, Ji, 2010. "Foreign Bank Penetration, Resource Allocation and Economic Growth: Evidence from Emerging Economies," Journal of Economic Integration, Center for Economic Integration, Sejong University, Center for Economic Integration, Sejong University, vol. 25, pages 167-193.
  3. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
  4. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economic Research Papers 2012-049, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Dilli Raj Khanal, 2007. "Services Trade in Developing Asia:A Case Study of the Banking and Insurance Sector in Nepal," Working Papers, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada. 3907, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..

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