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Access to Finance Thresholds and the Finance-Growth Nexus

  • Ben Jelili, Riadh
  • Abdmoulah, Walid
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    Based on Aghion et al. (2005), this article provides new insights regarding whether financial development can affect economic growth non-linearly by adopting the concept of threshold effects. The empirical approach adopted in this article allows for the finance-growth relationship to be piecewise linear with a set of indicators including access to finance acting as a regime-switching trigger. Using cross-country observations from 144 countries stretching from 1985 to 2009, strong evidence of threshold effects in finance-growth link is found. It is suggested that financial development in general, and access to finance in particular, is among the important forces contributing to crosscountry (non)-convergences in growth rates.

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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 52221.

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    Date of creation: Dec 2013
    Date of revision: 2012
    Handle: RePEc:pra:mprapa:52221
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    8. Bruno, Michael & Easterly, William, 1995. "Inflation crises and long-run growth," Policy Research Working Paper Series 1517, The World Bank.
    9. Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
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