Is the Growth Effect of Financial Development Conditional on Technological Innovation?
This paper argues that excessive financial development in combination with high levels of technological innovation or R&D activities may lead to the former being ineffective in generating economic growth. This hypothesis is examined through a dynamic panel analysis using two measures of financial development, in conjunction with R&D expenditure, for 36 OECD and non-OECD countries. Using a range of panel data estimators, our results show that the relationship between financial development and economic growth is not straightforward; rather, it is conditional upon the level of R&D. Further, we find that a high level of R&D is associated with a weak or negative effect of financial development on economic growth.
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- Maria Fuensanta Morales, 2001.
"Financial Intermediation in a Model of Growth through Creative Destruction,"
UFAE and IAE Working Papers
487.01, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Morales, Mar a F., 2003. "Financial Intermediation In A Model Of Growth Through Creative Destruction," Macroeconomic Dynamics, Cambridge University Press, vol. 7(03), pages 363-393, June.
- Maria Fuensanta Morales, 2000. "Financial Intermediation in a Model of Growth Through Creative Destruction," Econometric Society World Congress 2000 Contributed Papers 0914, Econometric Society.
- Deidda, Luca & Fattouh, Bassam, 2002.
"Non-linearity between finance and growth,"
Elsevier, vol. 74(3), pages 339-345, February.
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- Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
- Hakan Yilmazkuday, 2011. "Thresholds in the Finance-Growth Nexus: A Cross-Country Analysis," World Bank Economic Review, World Bank Group, vol. 25(2), pages 278-295, May.
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