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Financial dependence and growth: Diminishing returns to improvement in financial development

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  • Shen, Leilei

Abstract

This paper examines how much financial development facilitates economic growth by nonparametrically estimating the effect of financial development on reducing the costs of external finance to firms. The data reveal substantial evidence of diminishing returns to improvement in financial development.

Suggested Citation

  • Shen, Leilei, 2013. "Financial dependence and growth: Diminishing returns to improvement in financial development," Economics Letters, Elsevier, vol. 120(2), pages 215-219.
    • Handle: RePEc:eee:ecolet:v:120:y:2013:i:2:p:215-219
    DOI: 10.1016/j.econlet.2013.04.018
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    Cited by:

    1. Owen, Ann L. & Temesvary, Judit, 2014. "Heterogeneity in the growth and finance relationship: How does the impact of bank finance vary by country and type of lending?," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 275-288.
    2. Nickolaos G. Tzeremes, 2018. "Financial Development and Countries’ Production Efficiency: A Nonparametric Analysis," JRFM, MDPI, vol. 11(3), pages 1-13, August.
    3. Liu, Xuepeng & Mattoo, Aaditya & Wang, Zhi & Wei, Shang-Jin, 2020. "Services development and comparative advantage in manufacturing," Journal of Development Economics, Elsevier, vol. 144(C).
    4. Mallick, Sushanta & Matousek, Roman & Tzeremes, Nickolaos G., 2016. "Financial development and productive inefficiency: A robust conditional directional distance function approach," Economics Letters, Elsevier, vol. 145(C), pages 196-201.
    5. Thu-Trang Thi Doan & Toan Ngoc Bui, 2021. "The Impact of Financial Development on Corporate Performance: Theory and Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(1), pages 214-219, January.
    6. Lim, Taejun, 2018. "Growth, financial development, and housing booms," Economic Modelling, Elsevier, vol. 69(C), pages 91-102.
    7. Toan Ngoc Bui, 2020. "Financial Depth and the Real Estate Market: An Empirical Study of the Wealth Effect," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 10(8), pages 936-945, August.

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    More about this item

    Keywords

    Financial dependence; Growth; Semiparametric estimation;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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