The nonlinear relationship between economic growth and financial development: Evidence from developing, emerging and advanced economies

By Jarmila Botev, Balázs Égert, Fredj Jawadi. The International Economy, 2019

132 citations recorded by the source corpus.

Abstract This paper studies the relationship between financial development and economic growth in a large sample of developing, emerging and advanced economies over the recent period. Estimation results based on various nonlinear threshold regression models do not confirm the too-much-finance-is-bad hypothesis. We cannot indeed identify a tipping point beyond which financial development has a clear negative relation to economic development. Our results also show that banking and market finance are complementary. The positive effect of bank credit on growth is larger in stock markets that are deeper. But the thresholds above which complementarity kicks in are rather low level. Finally, the effects of bank and market finance do not seem to depend on economic development and trade openness.

Subfields: Economics and Econometrics, Information Systems

View Paper: https://www.semanticscholar.org/paper/b9fda8cd32a97cad94e2d9cd8bb3eb3cd1ad36ad

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In Economics and Econometrics

1. Muhammad Ali Nasir
2. Trumel Redmond
3. Muhammad Shahbaz

In Information Systems

1. Muhammad Ali Nasir
2. Trumel Redmond

Citations in the corpus

• Role of natural resource abundance, international trade and financial development in the economic development of selected countries (2020, background): “Bender (1965), in examining international trade and economic development, proposed four ways in which the international sector activated development.”