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Finance and Growth: Empirical Evidence from Developing Countries 1960-1990

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  • Mohamed Trabelsi

    (l’Institut des Hautes Etudes Commerciales, IHEC)

Abstract

This paper examined the empirical relationship between financial intermediation and economic growth using cross-country and panel data regressions for 69 developing countries for the period 1960-1990. The main results are: (i) Financial development is a significant determinant of economic growth in cross sectional regressions. (ii) Financial markets cease to exert any effect on real activity in panel data regressions. The paradox may be explained, in developing countries, by the lack of an entrepreneurial private sector capable to transform the funds into profitable projects. (iii) The effect of financial development on economic growth is channeled mainly through an increase in investment efficiency.

Suggested Citation

  • Mohamed Trabelsi, 2002. "Finance and Growth: Empirical Evidence from Developing Countries 1960-1990," Working Papers 0228, Economic Research Forum, revised 26 Sep 2002.
    • Handle: RePEc:erg:wpaper:0228
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    References listed on IDEAS

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    3. Comlanvi Jude EGGOH, 2009. "Développement financier, instabilité financière et croissance économique : un réexamen de la relation," LEO Working Papers / DR LEO 444, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    4. Bilge Kagan Ozdemir, 2009. "Banking Sector Stability During The Process Of Euro Adoption," Anadolu University Journal of Social Sciences, Anadolu University, vol. 9(1), pages 123-1236, June.
    5. Marques, Luís Miguel & Fuinhas, José Alberto & Marques, António Cardoso, 2012. "Interação entre o mercado acionista e o crescimento económico: Uma apreciação do caso português (1993-2010) [Interaction between the stock market and economic growth: An assessment of the Portugues," MPRA Paper 39808, University Library of Munich, Germany.
    6. Igue, Charlemagne Babatoundé, 2013. "Intermédiation financière et croissance économique : une approche basée sur le concept d’efficacité-X appliquée à la zone UEMOA," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(1), pages 7-37, Mars.
    7. Smaoui, Houcem & Nechi, Salem, 2017. "Does sukuk market development spur economic growth?," Research in International Business and Finance, Elsevier, vol. 41(C), pages 136-147.
    8. Ake Boubakari & Dehuan Jin, 2010. "The Role of Stock Market Development in Economic Growth: Evidence from Some Euronext Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 1(1), pages 14-20, December.

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