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Financial development and productive inefficiency: A robust conditional directional distance function approach

Author

Listed:
  • Mallick, Sushanta
  • Matousek, Roman
  • Tzeremes, Nickolaos G.

Abstract

This paper examines whether the level of financial development helps lower countries’ inefficiency using time-dependent robust conditional directional distance functions in a sample of 91 countries over 1970–2011. The overall results reveal that the effect of financial development on countries’ productive inefficiency is highly nonlinear, and depends on countries’ income levels, suggesting that higher levels of financial development are enhancing more countries’ catching-up ability rather than their technological change.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:ecolet:v:145:y:2016:i:c:p:196-201
    DOI: 10.1016/j.econlet.2016.06.019
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    References listed on IDEAS

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    1. Simar, Léopold & Vanhems, Anne, 2012. "Probabilistic characterization of directional distances and their robust versions," Journal of Econometrics, Elsevier, vol. 166(2), pages 342-354.
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    7. Subodh Kumar & R. Robert Russell, 2002. "Technological Change, Technological Catch-up, and Capital Deepening: Relative Contributions to Growth and Convergence," American Economic Review, American Economic Association, vol. 92(3), pages 527-548, June.
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    Cited by:

    1. repec:gam:jjrfmx:v:11:y:2018:i:3:p:46-:d:162486 is not listed on IDEAS
    2. repec:kap:jproda:v:48:y:2017:i:1:d:10.1007_s11123-017-0500-z is not listed on IDEAS
    3. repec:eee:ecmode:v:69:y:2018:i:c:p:134-149 is not listed on IDEAS
    4. repec:eee:ecmode:v:73:y:2018:i:c:p:395-406 is not listed on IDEAS
    5. repec:eee:ecmode:v:79:y:2019:i:c:p:247-261 is not listed on IDEAS
    6. repec:eee:ecmode:v:69:y:2018:i:c:p:91-102 is not listed on IDEAS
    7. Cinzia Daraio & Léopold Simar & Paul W. Wilson, 2018. "Fast and Efficient Computation of Directional Distance Estimators," DIAG Technical Reports 2018-05, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".

    More about this item

    Keywords

    Financial development; Technological change; Technological catch-up; Productive inefficiencies; Robust directional distance functions;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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