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The dynamic impacts of financial institutions on economic growth: Evidence from the European Union

Listed author(s):
  • Wu, Jyh-Lin
  • Hou, Han
  • Cheng, Su-Yin
Registered author(s):

    This paper investigates the dynamic impacts of financial institutions on economic growth based on a panel data set comprised of 13 countries in European Union (EU) over the period of 1976-2005. We found several important results. First, there exists a long-run equilibrium relationship among banking development, stock market development and economic development, and stock market capitalization and liquidity have positive long-run effects on economic development. Second, financial depth may have a negative long-run effect on real output, but improving risk diversification and information services of commercial banks results in stable economic development. Finally, stock market liquidity has a negative short-term influence on economic growth.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0164-0704(09)00065-2
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    Article provided by Elsevier in its journal Journal of Macroeconomics.

    Volume (Year): 32 (2010)
    Issue (Month): 3 (September)
    Pages: 879-891

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    Handle: RePEc:eee:jmacro:v:32:y:2010:i:3:p:879-891
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622617

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