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Does Non-intermediation Activity Tell us more in the Finance-Growth Nexus?

Author

Listed:
  • Han Hou

    (Lunghwa University of Science and Technology)

  • Su-Yin Cheng

    (Kainan University)

Abstract

This paper provides new evidences on traditional finance-growth nexus via dividing financial services into intermediation and non-intermediation services and examines their relationships with economic growth. Applying time series cointegration techniques and Granger causality tests for eight OECD countries, several results are obtained. First, there exists a long-run equilibrium relationship among economic growth, intermediation activities, and non-intermediation activities in Austria, France, and Korea. Second, we find that financial intermediation services promote long-run economic growth in France and Korea, whereas non-intermediation services impede Austria?s long-term economic growth. Finally, the development of non-intermediation activities leads the development of intermediation activities in France and the Netherlands in the short-term. This paper emphasizes the importance of non-intermediation activities in the growth process and in the development of intermediation services as well.

Suggested Citation

  • Han Hou & Su-Yin Cheng, 2017. "Does Non-intermediation Activity Tell us more in the Finance-Growth Nexus?," Proceedings of International Academic Conferences 5807316, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iacpro:5807316
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    File URL: https://iises.net/proceedings/33rd-international-academic-conference-vienna/table-of-content/detail?cid=58&iid=022&rid=7316
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    More about this item

    Keywords

    financial Intermediation; non-intermediation; Economic growth; Causality;
    All these keywords.

    JEL classification:

    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • F30 - International Economics - - International Finance - - - General
    • G20 - Financial Economics - - Financial Institutions and Services - - - General

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