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Financial Intermediation and Macroeconomic Efficiency

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Listed author(s):
  • Yves Kuhry
  • Laurent Weill

    ()

    (Laboratoire de Recherche en Gestion et Economie, Institut d'Etudes Politiques, Strasbourg)

Abstract

This article evaluates whether financial intermediary development explains cross-country differences in macroeconomic efficiency. Stochastic frontier approach is applied at the aggregate level to estimate efficiency on a panel of 41 countries for the period 1991 to 1995. Generalized Method of Moments (GMM) dynamic panel techniques are then adopted to control for potential endogeneity of the regressors. We find evidence of a positive role of financial intermediary development on efficiency, with differences in terms of robustness according to the measure of financial intermediary development.

(This abstract was borrowed from another version of this item.)

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Paper provided by Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg in its series Working Papers of LaRGE Research Center with number 2008-03.

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Date of creation: 2008
Handle: RePEc:lar:wpaper:2008-03
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Keywords: Financial development; income; aggregate productivity; efficiency.;

Other versions of this item:

Find related papers by JEL classification:
  • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
  • 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
  • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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  1. Loayza, Norman V. & Ranciere, Romain, 2006. "Financial Development, Financial Fragility, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 1051-1076, June.
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  7. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
  8. Rioja, Felix & Valev, Neven, 2004. "Does one size fit all?: a reexamination of the finance and growth relationship," Journal of Development Economics, Elsevier, vol. 74(2), pages 429-447, August.
  9. Raghuram G. Rajan, 1994. "Why Bank Credit Policies Fluctuate: A Theory and Some Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 109(2), pages 399-441.
  10. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
  11. Robert E. Hall & Charles I. Jones, 1999. "Why do Some Countries Produce So Much More Output Per Worker than Others?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(1), pages 83-116.
  12. Philip Arestis & Georgios Chortareas & Evangelia Desli, 2006. "Financial Development And Productive Efficiency In Oecd Countries: An Exploratory Analysis," Manchester School, University of Manchester, vol. 74(4), pages 417-440, 07.
  13. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
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Cited by:

  1. Gheeraert, Laurent & Weill, Laurent, 2015. "Does Islamic banking development favor macroeconomic efficiency? Evidence on the Islamic finance-growth nexus," Economic Modelling, Elsevier, vol. 47(C), pages 32-39.
  2. Banyár, József & Regős, Gábor, 2012. "Paradoxical price effects on insurance markets," Economic Modelling, Elsevier, vol. 29(4), pages 1399-1407.

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