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Finance and growth: Nonlinearity and structural shifts

Author

Listed:
  • Krinichansky, Konstantin

    (Financial University under the Government of the RF, Moscow, Russian Federation;)

  • Yurevich, Maksim

    (Financial University under the Government of the RF, Moscow, Russian Federation;)

Abstract

his study focuses on the nature and limits of the relationship between financial development and economic growth. The revealed non-linearity of this relationship is associated with a latent restructuring of mechanisms of economic financing, which took place during the financial and economic crisis of 2007-2009 and the years following it. The crisis, which hit the banking sector the hardest, simultaneously increased the role of the stock market. Using the two-step system GMM approach and the structural breaks algorithm, it is shown that the economic growth rates after 2010 are significantly related to stock market indicators, rather than the credit depth ones commonly used in finance-growth models.

Suggested Citation

  • Krinichansky, Konstantin & Yurevich, Maksim, 2023. "Finance and growth: Nonlinearity and structural shifts," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 72, pages 5-22.
    • Handle: RePEc:ris:apltrx:0482
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    financial development; financial depth; stock market capitalization; economic growth; non-linearity; structural breaks.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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