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The Finance-growth Relationship and the Level of Country Development

  • Su-Yin Cheng


  • Chia-Cheng Ho


  • Han Hou


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    We examine whether dynamic impacts of banks and stock markets on economic growth are related to the level of country development. Using annual data from 15 industrial and 15 emerging countries over the period from 1976 to 2005, we find that banking development and stock market development may have distinct short-and long-run impacts on economic growth at various stages of country development. Financial development is not always a panacea for economic growth. Most importantly, our findings suggest that the fully functional tools to render stable growth for a country may depend on the level of the country’s development. Copyright Springer Science+Business Media New York 2014

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    Article provided by Springer in its journal Journal of Financial Services Research.

    Volume (Year): 45 (2014)
    Issue (Month): 1 (February)
    Pages: 117-140

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    Handle: RePEc:kap:jfsres:v:45:y:2014:i:1:p:117-140
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