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Banking sector openness and economic growth

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  • Bayraktar, Nihal
  • Wang, Yan

Abstract

Banking sector openness may directly affect growth by improving the access to financial services and indirectly by improving the efficiency of financial intermediaries, both of which reduce the cost of financing, and in turn, stimulate capital accumulation and economic growth. The objective of the paper is to empirically reinvestigate these direct and indirect links using a more advanced econometric technique (GMM dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results confirm the presence of direct and indirect links, and thus provide support for countries planning to open their banking sector for international competition.

Suggested Citation

  • Bayraktar, Nihal & Wang, Yan, 2006. "Banking sector openness and economic growth," Policy Research Working Paper Series 4019, The World Bank.
  • Handle: RePEc:wbk:wbrwps:4019
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    References listed on IDEAS

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    Cited by:

    1. Nam Jeon, Bang & Wu, Ji, 2010. "Foreign Bank Penetration, Resource Allocation and Economic Growth: Evidence from Emerging Economies," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 167-193.
    2. Caporale, Guglielmo Maria & Lodh, Suman & Nandy, Monomita, 2017. "The performance of banks in the MENA region during the global financial crisis," Research in International Business and Finance, Elsevier, vol. 42(C), pages 583-590.
    3. Dilli Raj Khanal, 2007. "Services Trade in Developing Asia:A Case Study of the Banking and Insurance Sector in Nepal," Working Papers 3907, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    4. Hoekman, Bernard & Mattoo, Aaditya, 2008. "Services trade and growth," Policy Research Working Paper Series 4461, The World Bank.
    5. Karam, Fida & Zaki, Chahir, 2015. "Trade volume and economic growth in the MENA region: Goods or services?," Economic Modelling, Elsevier, vol. 45(C), pages 22-37.
    6. Bianka Dettmer, 2012. "Business services outsourcing and economic growth: Evidence from a dynamic panel data approach," Jena Economic Research Papers 2012-049, Friedrich-Schiller-University Jena.

    More about this item

    Keywords

    Banks&Banking Reform; Economic Theory&Research; Financial Intermediation; Achieving Shared Growth; Financial Crisis Management&Restructuring;

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