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A nonparametric model of financial system and economic growth

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  • Mishra, Sagarika
  • Narayan, Paresh Kumar

Abstract

In this paper, we show that in the proposed models for economic growth, the financial system variables are generally nonparametric. We, thus, use a nonparametric panel data model to estimate the financial system–economic growth relationship. Our results suggest that as long as a country's domestic credit and private credit are above their cross-sectional mean they have a positive effect on GDP growth. We also discover that market capitalisation positively and significantly impacts GDP growth, while stocks traded (with the exception of OECD countries) has a statistically insignificant effect on GDP growth.

Suggested Citation

  • Mishra, Sagarika & Narayan, Paresh Kumar, 2015. "A nonparametric model of financial system and economic growth," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 175-191.
    • Handle: RePEc:eee:reveco:v:39:y:2015:i:c:p:175-191
    DOI: 10.1016/j.iref.2015.04.004
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