Determinants of the link between financial and economic development: Evidence from a functional coefficient model

Herwartz, Helmut; Walle, Yabibal M.

doi:10.1016/j.econmod.2013.11.029

Cited by 97 publications

(80 citation statements)

References 39 publications

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“…Durham (2002) reported that a positive relationship between stock market development and growth holds for only high-income countries. Herwartz and Walle (2014) found that the finance growth link is stronger in high-income economies than in low-income ones. They also reveal that the finance growth link turns negative for low-income economies when they have a large government or if they are open to international trade.…”

Section: Empirical Evidencementioning

confidence: 97%

“…They found that economic growth promotes financial development but not vice versa. However, Herwartz and Walle (2014), using almost the same number of countries as in Hartmann et al (2012) over the period 1975-2011, utilising a flexible semi-parametric technique, found that the finance growth link is stronger in high-income economies than in low-income ones.…”

Section: Empirical Evidencementioning

confidence: 99%

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Bond markets, stock markets, banks and growth: a system GMM analysis

Fanta

2017

GBER

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Empirical studies on the finance-growth nexus largely focus on banks and stock markets to the exclusion of bond markets. Furthermore, such important events as bank crisis are neglected in most finance-growth models. The major aim of this paper is therefore to throw light at the finance growth link by accounting for bond markets and controlling for banking sector crisis using data on economic growth and financial development indicators of 36 economies comprising 21 advanced and 15 emerging economies. Applying a system generalised-method-of-moments (GMM) technique, the study revealed that bond markets rather than banks and stock markets are related to economic growth in advanced economies, and the same relationship is not found for emerging economies. It is further observed that the finance-growth link depends on the specific measures used to gauge financial development. This study also confirms previous findings that crisis dampens the finance-growth link. Two important inferences could be made from the results of this study. First, the often reported positive link between finance and growth might be caused by aggregation of countries of different economic growth and financial development. Second, the finance growth link depends on the measures of financial development used.

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Section: Empirical Evidencementioning

confidence: 97%

Section: Empirical Evidencementioning

confidence: 99%

Bond markets, stock markets, banks and growth: a system GMM analysis

Fanta

2017

GBER

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“…According to Levine et al (2000) financial systems that transfer more credit for private sector than public sector activate more savings. Herwartz and Walle (2014) suggest that this parameter (PSC) is more effective in measuring financial intermediation activity with regards to its exclusion of credits granted to public sector by the central bank. Ang and Mckibbin (2007) emphasize that giving preference to the said parameter is favorable, considering private sector's effective and active use of funds as against public sector.…”

Section: Datamentioning

confidence: 99%

The impacts of financial development on growth: A time-varying causality analysis for Turkey

Ak¹,

Kırca²,

Altintaş³

2016

Zb.rad.Ekon.fak.Rij.

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“…Most relevant to the current context, Herwartz and Walle (2014) examined the impacts of trade openness and financial openness on the finance-growth linkage. They found that greater trade openness strengthened this linkage, whereas greater financial openness eroded it.…”

Section: Financial Integration and Financial Developmentmentioning

confidence: 99%

Heterogeneous Patterns of Financial Development: Implications for Asian Financial Integration

Bun

Singh

2016

International Economic Journal

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This paper analyzes detailed differences in patterns of financial development across the major Asian economies, including three of the region's largest economies (China, Japan and South Korea), to understand how these differences might affect possibilities for greater regional financial integration. In particular, the paper argues that heterogeneous patterns of financial development, and not just differences in levels of financial development, may present an economic challenge to regional financial integration efforts, aside from possible political challenges. The paper provides background on the case for financial openness, Asian experiences with financial integration, and regional economic responses to external shocks. It also discusses policy options, including regulatory reform and coordination, and possible risk management policies and institutions, in the context of heterogeneous patterns of financial development.

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Determinants of the link between financial and economic development: Evidence from a functional coefficient model

Cited by 97 publications

References 39 publications

Bond markets, stock markets, banks and growth: a system GMM analysis

Bond markets, stock markets, banks and growth: a system GMM analysis

The impacts of financial development on growth: A time-varying causality analysis for Turkey

Heterogeneous Patterns of Financial Development: Implications for Asian Financial Integration

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