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“Finance And Growth” Re-Visited

Author

Listed:
  • LIZETHE MÉNDEZ-HERAS

    (Universidad Autónoma Metropolitana, Mexico City, Mexico)

  • STEVEN ONGENA

    (University of Zurich, Swiss Finance Institute, Switzerland3KU Leuven and CEPR, Belgium)

Abstract

We test whether the relationship between finance and growth is present in 48 countries over 20 different periods of an equal length of 15 years, starting in 1980 (to 1995) and ending in 1999 (to 2014). We estimate growth regressions using an IV approach and we find that (1) overall financial development had a positive effect on economic growth for almost all our studied periods, (2) the legal system is the primary determinant of the effectiveness of the overall financial system, and (3) financial services were relevant for economic growth even during the financial crisis of 2008. This research is part of a research agenda revisiting the finance–growth nexus using up-to-date empirical methodologies.

Suggested Citation

  • Lizethe Méndez-Heras & Steven Ongena, 2020. "“Finance And Growth” Re-Visited," Journal of Financial Management, Markets and Institutions (JFMMI), World Scientific Publishing Co. Pte. Ltd., vol. 8(01), pages 1-28, June.
    • Handle: RePEc:wsi:jfmmix:v:08:y:2020:i:01:n:s2282717x20500012
    DOI: 10.1142/S2282717X20500012
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