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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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    File URL: http://mpra.ub.uni-muenchen.de/52221/1/MPRA_paper_52221.pdf
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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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    1. Howitt, Peter & Aghion, Philippe, 2006. "Appropriate Growth Policy: A Unifying Framework," Scholarly Articles 4554121, Harvard University Department of Economics.
    2. Chih Ming Tan, 2005. "No One True Path: Uncovering the Interplay between Geography, Institutions, and Fractionalization in Economic Development," Discussion Papers Series, Department of Economics, Tufts University 0512, Department of Economics, Tufts University.
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    7. Michael Bruno & William Easterly, 1995. "Inflation Crises and Long-Run Growth," NBER Working Papers 5209, National Bureau of Economic Research, Inc.
    8. Greenwood, J. & Jovanovic, B., 1990. "Financial Development, Growth, And The Distribution Of Income," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
    9. Bruce E. Hansen, 2000. "Sample Splitting and Threshold Estimation," Econometrica, Econometric Society, vol. 68(3), pages 575-604, May.
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