Finance, growth and threshold effects
In this paper, we test the existence of financial development threshold effects, firstly, between financial development and long-term growth, and, secondly, between financial development and long-term GDP. We also ask whether such effects may explain the link financial development - convergence/...
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| Format: | Article |
| Language: | English |
| Published: |
Economists' Association of Vojvodina
2012-01-01
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| Series: | Panoeconomicus |
| Subjects: | |
| Online Access: | http://www.doiserbia.nb.rs/img/doi/1452-595X/2012/1452-595X1205553A.pdf |
| _version_ | 1811298879765741568 |
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| author | Allegret Jean-Pierre Azzabi Sana |
| author_facet | Allegret Jean-Pierre Azzabi Sana |
| author_sort | Allegret Jean-Pierre |
| collection | DOAJ |
| description | In this paper, we test the existence of financial development threshold effects, firstly, between financial development and long-term growth, and, secondly, between financial development and long-term GDP. We also ask whether such effects may explain the link financial development - convergence/ divergence to the advanced countries’ growth. Our work builds on that of Aghion, Howitt, and Mayer-Foulkes (2004). It differs from previous work about assumptions and methodology. Estimates are performed with GMM dynamic panel data techniques for 112 emerging and developing countries from 1975 to 2007. The results show a positive but vanishing effect of financial development on steady-state GDP, from a critical (an average) level of financial development. They do not validate, however, the assumption that the marginal impact of financial development on the steady-state growth rate is more favorable than the degree of financial development is low. We support only partially the role that the financial development could play in the acceleration of the convergence of emerging and developing economies towards the world frontier growth. |
| first_indexed | 2024-04-13T06:26:49Z |
| format | Article |
| id | doaj.art-e29315a7390149299044d1871514a32c |
| institution | Directory Open Access Journal |
| issn | 1452-595X |
| language | English |
| last_indexed | 2024-04-13T06:26:49Z |
| publishDate | 2012-01-01 |
| publisher | Economists' Association of Vojvodina |
| record_format | Article |
| series | Panoeconomicus |
| spelling | doaj.art-e29315a7390149299044d1871514a32c2022-12-22T02:58:25ZengEconomists' Association of VojvodinaPanoeconomicus1452-595X2012-01-0159555358110.2298/PAN1205553AFinance, growth and threshold effectsAllegret Jean-PierreAzzabi SanaIn this paper, we test the existence of financial development threshold effects, firstly, between financial development and long-term growth, and, secondly, between financial development and long-term GDP. We also ask whether such effects may explain the link financial development - convergence/ divergence to the advanced countries’ growth. Our work builds on that of Aghion, Howitt, and Mayer-Foulkes (2004). It differs from previous work about assumptions and methodology. Estimates are performed with GMM dynamic panel data techniques for 112 emerging and developing countries from 1975 to 2007. The results show a positive but vanishing effect of financial development on steady-state GDP, from a critical (an average) level of financial development. They do not validate, however, the assumption that the marginal impact of financial development on the steady-state growth rate is more favorable than the degree of financial development is low. We support only partially the role that the financial development could play in the acceleration of the convergence of emerging and developing economies towards the world frontier growth.http://www.doiserbia.nb.rs/img/doi/1452-595X/2012/1452-595X1205553A.pdffinancial developmenteconomic growthconvergencethreshold effectsgeneralized method of momentsdynamic panel |
| spellingShingle | Allegret Jean-Pierre Azzabi Sana Finance, growth and threshold effects Panoeconomicus financial development economic growth convergence threshold effects generalized method of moments dynamic panel |
| title | Finance, growth and threshold effects |
| title_full | Finance, growth and threshold effects |
| title_fullStr | Finance, growth and threshold effects |
| title_full_unstemmed | Finance, growth and threshold effects |
| title_short | Finance, growth and threshold effects |
| title_sort | finance growth and threshold effects |
| topic | financial development economic growth convergence threshold effects generalized method of moments dynamic panel |
| url | http://www.doiserbia.nb.rs/img/doi/1452-595X/2012/1452-595X1205553A.pdf |
| work_keys_str_mv | AT allegretjeanpierre financegrowthandthresholdeffects AT azzabisana financegrowthandthresholdeffects |