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Linking the missing market: The effect of bond markets on economic growth

  • Thumrongvit, Patara
  • Kim, Yoonbai
  • Pyun, Chong Soo

Past studies have largely focused on the positive role of banks and stock markets on economic growth. This paper adds bond markets as a third key component of the financial system. Using a panel data set of 38 countries, and applying the generalized method of moments techniques for dynamic panels, we find that (i) stock market development is positively related to economic growth; (ii) the contributing role of bank credit to economic growth diminishes as domestic bond markets develop; (iii) government bonds are positively related to economic growth, while the effects of corporate bonds change from negative to positive, as domestic financial structures expand in size and diversity.

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File URL: http://www.sciencedirect.com/science/article/pii/S1059056013000099
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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 27 (2013)
Issue (Month): C ()
Pages: 529-541

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Handle: RePEc:eee:reveco:v:27:y:2013:i:c:p:529-541
DOI: 10.1016/j.iref.2013.01.008
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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