Financial development and economic growth in developing countries

Abstract

The hypothesis that fi nancial development promotes economic growth in developing countries is largely supported by empirical studies, though contrary evidence also exists. This relationship is reexamined using annual panel data for 44 developing countries for 1974-2001. Three sources-of-growth equations, which are specifi ed from aggregate production functions, are estimated: two are theoretically consistent, while the third uses a common proxy (DEPTH) for fi nancial development. Results show confl icting evidence: the theoretically consistent models show a positive and statistically signifi cant relationship between fi nancial development and economic growth, whereas the proxy version shows the opposite. Measuring fi nancial development appropriately appears critical for policy advice.

Finance – Growth Nexus in Nigeria: Fragility and Development Effects

“…Liquid liabilities are measured using either, M1 (narrow definition of money), M2 (broad definition of money) or M3 (broader definition of money). Thus, in relation to financial depth, some researchers use the ratio of M2 to GDP (Anwar and Cooray 2012), some others uses M3 to GDP (Dawson 2008), especially in an economic context where money is principally used as a store of value. Some researchers also prefer to use the ratio of the difference between M3 and M1 to the GDP (Yilmazkuday 2011).…”

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

“…Our findings imply that financial development plays a role in economic growth for the Turkey, in line with Gupta (1984), Jung (1986, Neusser and Kugler (1998), King ve Levine (1993), Fry (1995, Levine ve Zervos (1998) Demetrias andHussein (1996), Choe and Moosa (1999), Rousseau and Watchell (2000), Shan vd. (2001), Beck et al (2000), Levine et al (2000), Christopoulos and Tsionas (2004), Dawson (2008).…”

“…While Beck et al (2000), Levine et al (2000), Christopoulos and Tsionas (2004), Dawson (2008), Hsueh et al (2013), Nazlioglu et al (2014) assert that financial development leads to economic growth, Kar et al (2011) claim financial development's role in growth process is ambiguous.…”

Banking supervision: current trends and prospects

“…The extreme measure of impactrevocation of the license -was applied to 93 credit organizations [6,7].…”