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The Finance and Growth Nexus Re-Examined: Do All Countries Benefit Equally?

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Listed:
  • Adolfo Barajas

    (International Monetary Fund, U.S.A.)

  • Ralph Chami

    (International Monetary Fund, U.S.A.)

  • Seyed Reza Yousefi

    (World Bank, U.S.A)

Abstract

A large theoretical and empirical literature has focused on the impact of financial deepening on economic growth throughout the world. This paper contributes to the literature by investigating whether this impact differs across regions, income levels, and types of economy. Using a rich data set for 150 countries for the period 1975–2005, dynamic panel estimation results suggest that the bene ficial effect of financial deepening on economic growth in fact displays measurable heterogeneity; it is generally smaller in oil exporting countries; in certain regions, such as the Middle East and North Africa (MENA); and in lower-income countries. Further analysis suggests that these differences might be driven by the degree of competition, and related to differences in the ability to provide widespread access to financial services.

Suggested Citation

  • Adolfo Barajas & Ralph Chami & Seyed Reza Yousefi, 2016. "The Finance and Growth Nexus Re-Examined: Do All Countries Benefit Equally?," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(5), pages 5-38, June.
    • Handle: RePEc:sgm:jbfeuw:v:1:y:2016:i:5:p:5-38
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    More about this item

    Keywords

    Growth; Financial Development; Inclusive Growth; Financial Access;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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