scholarly journals “FINANCE AND GROWTH” RE-VISITED

2020 ◽  
Vol 08 (01) ◽  
pp. 2050001
Author(s):  
LIZETHE MÉNDEZ-HERAS ◽  
STEVEN ONGENA
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Financial Services ◽  
Research Agenda ◽  
Growth Regressions ◽  
Primary Determinant ◽  
Almost All ◽  
The Relationship ◽  
Positive Effect ◽  
Finance Growth Nexus

We test whether the relationship between finance and growth is present in 48 countries over 20 different periods of an equal length of 15 years, starting in 1980 (to 1995) and ending in 1999 (to 2014). We estimate growth regressions using an IV approach and we find that (1) overall financial development had a positive effect on economic growth for almost all our studied periods, (2) the legal system is the primary determinant of the effectiveness of the overall financial system, and (3) financial services were relevant for economic growth even during the financial crisis of 2008. This research is part of a research agenda revisiting the finance–growth nexus using up-to-date empirical methodologies.

scholarly journals Financial Development and Economic Growth in ASEAN-5 Countries

2018 ◽  
Vol 20 (1) ◽  
pp. 57-71 ◽  
Author(s):  
Chinnasamy Agamudai Nambhi Malarvizhi ◽  
Yashar Zeynali ◽  
Abdullah Al Mamun ◽  
Ghazali Bin Ahmad
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Economic Efficiency ◽  
Capital Accumulation ◽  
Physical Capital ◽  
Significant Positive Effect ◽  
Domestic Investment ◽  
The Relationship ◽  
Physical Capital Accumulation ◽  
Positive Effect

This article explores the relationship between financial sector development and economic growth, using a sample of ASEAN-5 countries (Malaysia, Indonesia, Singapore, Thailand and Philippines) from 1980 to 2011. More specifically, this study investigates whether higher levels of financial development (FD) are significantly and robustly correlated with faster current and future rates of economic growth, physical capital accumulation and economic efficiency improvements. Findings of this study revealed that FD has a significant positive effect on economic growth. However, the estimated models show that the influence of FD, as a determinant for economic growth of ASEAN-5 countries, is less than that of domestic investment and export.

scholarly journals Non-Linear Relationship between Financial Development, Economic Growth and Growth Volatility: Evidence from Nigeria

2018 ◽  
Author(s):  
Oro Ufuo Oro ◽  
Paul Alagidede
Keyword(s):  
Economic Growth ◽  
Linear Relationship ◽  
Financial Development ◽  
Financial Services ◽  
Policy Implications ◽  
Empirical Literature ◽  
Development Economic ◽  
Econometric Methods ◽  
Growth Volatility ◽  
The Relationship

The relationship between economic growth, growth volatility and financial sector development continues to attract attention in the theoretical and empirical literature. Over time, some studies hypothesize that finance has a causal linear relationship with growth. Recently several other authors contradict this claim and argue that the relationship that exists between finance and growth is nonlinear. We investigate these claims for Nigeria for the period between 1970 and 2015, using semi-parametric econometric methods, Hansen sample splitting techniques and threshold estimator. We observed no evidence of ‘Too much finance’ as claimed by many researchers in recent times. We show that the relationship between financial development and economic growth is U-shaped. This is equally true for the relationship between financial development and growth volatility. We also discuss policy implications of our findings and recommend financial innovations and decentralization of stock exchanges to boost access to financial services, in addition, improved regulation to enhance financial market efficiency.

scholarly journals The Relationship between FDI, Economic Growth and Financial Development in Cabo Verde

2017 ◽  
Vol 9 (5) ◽  
pp. 132 ◽  
Author(s):  
Leandro Do Rosário Viana Duarte ◽  
Yin Kedong ◽  
Li Xuemei
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Causality Analysis ◽  
Cabo Verde ◽  
Granger Causality Analysis ◽  
Long Run ◽  
Domestic Credit ◽  
Bound Test ◽  
The Relationship ◽  
Positive Effect

This paper examines the relationship between foreign direct investment (FDI), economic growth and financial development in Cabo Verde for the period 1987-2014.The methodology involves the use of bound test approach to cointegration (ARDL) as well as the ECM-Granger causality analysis. The bound test indicated that there is a long-run relationship when the variable GDP and FDI are the dependent variable. Moreover, the results indicated that FDI has a positive effect on the economic growth in Cabo Verde. It also found a bidirectional causality between FDI and economic growth, i.e. FDI granger causes GDP and GDP granger cause FDI. Thus, we concluded that higher levels of FDI inflow mean higher levels of economic growth and vice versa for the economy of Cabo Verde. Furthermore, we found that both economic growth and domestic credit to private sector are important factors in stimulating the FDI into the country. These results found are important for the country policymakers to take appropriate measures to enhance and improve the condition for FDI inflow in Cabo Verde.

scholarly journals FINANCE AND BALANCED GROWTH

2013 ◽  
Vol 18 (4) ◽  
pp. 883-898 ◽  
Author(s):  
Alex Trew
Keyword(s):  
Economic Growth ◽  
Endogenous Growth ◽  
Financial Development ◽  
Financial Services ◽  
Value Added ◽  
Financial Efficiency ◽  
Balanced Growth ◽  
Empirical Results ◽  
Cross Country ◽  
The Relationship

We study the relationships between various concepts of financial development and balanced economic growth. A model of endogenous growth that incorporates roles for both financial efficiency and access to financial services permits a better understanding of the relationship between the size of the financial sector (value added) and growth. Higher financial value added results from some, but not all, kinds of finance-driven growth. If greater access rather than greater efficiency generates higher growth, then value added and growth can be positively correlated. We present some preliminary empirical results that support the importance of access alongside efficiency in explaining cross-country variations in growth.

Financial Intermediation and Growth: Theory and Some Cross-Country Evidence

1997 ◽  
Vol 36 (4II) ◽  
pp. 855-862
Author(s):  
Tayyeb Shabir
Keyword(s):  
Economic Growth ◽  
Financial Markets ◽  
Financial Intermediation ◽  
Empirical Estimates ◽  
Financial Liberalisation ◽  
Cross Country ◽  
Level Of Significance ◽  
The Relationship ◽  
Positive Effect ◽  
Theoretical Developments

Well-functioning financial markets can have a positive effect on economic growth by facilitating savings and more efficient allocation of capital. This paper characterises some of the recent theoretical developments that analyse the relationship between financial intermediation and economic growth and presents empirical estimates based on a model of the linkage between financially intermediated investment and growth for two separate groups of countries, developing and advanced. Empirical estimates for both groups suggest that financial intermediation through the efficiency of investment leads to a higher rate of growth per capita. The relevant coefficient estimates show a higher level of significance for the developing countries. This financial liberalisation in the form of deregulation and establishment and development of stock markets can be expected to lead to enhanced economic growth.

The relationship between financial development and economic growth in Eswatini (formerly Swaziland)

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Siphe-okuhle Fakudze ◽  
Asrat Tsegaye ◽  
Kin Sibanda
Keyword(s):  
Economic Growth ◽  
Granger Causality ◽  
Financial Development ◽  
Granger Causality Test ◽  
Causality Test ◽  
Content Type ◽  
Distributed Lag ◽  
Long Run ◽  
Short Run ◽  
The Relationship

PurposeThe paper examined the relationship between financial development and economic growth for the period 1996 to 2018 in Eswatini.Design/methodology/approachThe Autoregressive Distributed Lag bounds test (ARDL) was employed to determine the long-run and short-run dynamics of the link between the variables of interest. The Granger causality test was also performed to establish the direction of causality between financial development and economic growth.FindingsThe ARDL results revealed that there is a long-run relationship between financial development and economic growth. The Granger causality test revealed bidirectional causality between money supply and economic growth, and unidirectional causality running from economic growth to financial development. The results highlight that economic growth exerts a positive and significant influence on financial development, validating the demand following hypothesis in Eswatini.Practical implicationsPolicymakers should formulate policies that aims to engineer more economic growth. The policies should strike a balance between deploying funds necessary to stimulate investment and enhancing productivity in order to enliven economic growth in Eswatini.Originality/valueThe study investigates the finance-growth linkage using time series analysis. It determines the long-run and short-run dynamics of this relationship and examines the Granger causality outcomes.

scholarly journals PENGARUH FINANCIAL DEVELOPMENT TERHADAP PERTUMBUHAN EKONOMI DI INDO

2020 ◽  
Vol 2 (1) ◽  
pp. 75
Author(s):  
Nia Putri Kunanti ◽  
Melti Roza Adry
Keyword(s):  
Economic Growth ◽  
Money Supply ◽  
Financial Development ◽  
Linear Regression Analysis ◽  
Trade Openness ◽  
Control Variable ◽  
Secondary Data ◽  
Negative Effect ◽  
Private Credit ◽  
Positive Effect

This study aims to determine how the influence of financial development on economic growth in Indonesia. Financial development indicators are M2 money supply, bank assets, private credit and trade openness. Where inflation and trade openness as a control variable and economic growth as the dependent variable. The data used in this study are secondary data from 2005 quarter 1 to 2018 quarter 4 which were collected through documentation and related agencies. This study uses multiple linear regression analysis and error correction models. The results of this study indicate that: (1) the money supply M2 has a negative effect on economic growth in Indonesia; (2) Bank assets have a negative effect on economic growth in Indonesia; (3) Private credit has a positive effect on economic growth in Indonesia; (4)) trade openness has a positive effect on economic growth in Indonesia.

scholarly journals How do Poverty and Income Inequality affect Economic Growth in Developing Countries?

2021 ◽  
Vol 4 (2) ◽  
pp. 547-558
Author(s):  
Hamza Saleem ◽  
Fatima Farooq ◽  
Muhammad Aurmaghan
Keyword(s):  
Economic Growth ◽  
Developing Countries ◽  
Panel Data ◽  
Income Inequality ◽  
Negative Impact ◽  
Positive Impact ◽  
Development Indicators ◽  
The Relationship ◽  
Positive Effect ◽  
World Development

The major objective of this research is to examine the relationship between poverty, income inequality and economic growth from some selected developing countries. This study uses panel data for the period of 2002-2015. All the data is taken from world development indicators (WDI). To find out the results, we have used Hausman test an econometrics technique for panel data in this research. The results of the study indicate that poverty and income inequality have a negative impact on economic growth on the other hand Gross capital formation, labor force, total population and government consumption and expenditure have a positive impact on economic growth. The result tells us that changes in these variables have a significant and positive effect on the dependent variable. To achieve the goal of economic growth developing countries should reduce poverty and take meaningful steps to overcome the problem of inequality in the society which can be very helpful in achieving the goal of economic growth.

scholarly journals Financial development and growth in Hungary

2015 ◽  
Vol 5 (3) ◽  
pp. 205-213
Author(s):  
Kunofiwa Tsaurai
Keyword(s):  
Economic Growth ◽  
Data Analysis ◽  
Trend Analysis ◽  
Financial Development ◽  
Case Study Approach ◽  
Study Approach ◽  
Clear Cut ◽  
Single Study ◽  
The Relationship

This study investigated the relationship between financial development and economic growth in Hungary using a case study approach. Majority of previous studies on the same or similar topic have so far used regression and or econometric methodologies to examine the nature of the relationship between financial development and economic growth. Not a single study the author is aware of used a case study approach to discuss the relationship between the two variables. It is against this background that the author decided to use the case study approach that allows the author to really deepen an understanding of the relationship between the two variables in Hungary. Apart from being narrowly focused on regression or econometric approaches, previous studies on the same or similar topic in Hungary excluded a broad range of financial development variables. The current study departs from these previous studies as it used a case study approach and taken into account a broad range of financial development variables. From the trend analysis done in section 3, it appears that the relationship between financial development and growth in Hungary during the period under study is not clear. A definite and clear cut conclusion could not be reached about the relationship between the two variables in Hungary hence the use of econometric data analysis approaches in conjuction with the case study approach is recommended.

Empirical Study on the Relationship between Financial Development and Economic Growth in China Based on Maximum Flow Algorithm

2021 ◽  
Vol 7 (5) ◽  
pp. 4463-4473
Author(s):  
Qiao Wang
Keyword(s):  
Economic Growth ◽  
Financial Development ◽  
Influencing Factor ◽  
Maximum Flow ◽  
Theoretical Research ◽  
Particle Swarm Algorithm ◽  
Model Parameters ◽  
Factors Affecting ◽  
Flow Algorithm ◽  
The Relationship

Objectives: The relationship between finance and economic growth has always been one of the hot issues in theoretical research and empirical analysis. As one of the important factors affecting economic growth, finance has long been recognized by the majority of scholars. Methods: In the context of the development of Internet e-commerce, empirical research on the relationship between China’s financial development and economic growth is conducted based on the maximum traffic algorithm. Results: Based on this, this paper constructs the Probit and Logistic binary discrete selection model for economic growth, and the discrete particle swarm algorithm is used to solve the sequence of influencing factors, estimating the model parameters, and the degree of influence of each influencing factor is calculated. Conclusion: The degree of concurrent employment is a decisive factor in economic growth.

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