Financial intermediation and growth: Causality and causes
نویسندگان
چکیده
This paper evaluates (1) whether the exogenous component of "nancial intermediary development in#uences economic growth and (2) whether cross-country di!erences in legal and accounting systems (e.g., creditor rights, contract enforcement, and accounting standards) explain di!erences in the level of "nancial development. Using both traditional cross-section, instrumental variable procedures and recent dynamic panel techniques, we "nd that the exogenous components of "nancial intermediary development is positively associated with economic growth. Also, the data show that cross-country di!erences in legal and accounting systems help account for di!erences in "nancial development. Together, these "ndings suggest that legal and accounting reforms that strengthen creditor rights, contract enforcement, and accounting practices can boost "nancial development and accelerate economic growth. ( 2000 Published by Elsevier Science B.V. All rights reserved. JEL classixcation: O16; O40; G28
منابع مشابه
Financial Intermediation by Banks and Economic Growth: a Review of Empirical Evidence
This paper provides a review of empirical research on the link between financial intermediation by banks and economic growth. Special attention is paid to the issues of causality, non-linearity, time perspective, financial intermediation proxies, and interaction terms. The review shows that there are still quite a few unresolved issues in empirical research, which causes scepticism towards prio...
متن کاملLong-term and Short-term Effects of Financial Intermediation on Economic Growth
Financial intermediation in Iran's banking system is negatively affected at least in two ways. First, there are many similarities between financial intermediation and usurious activities in the common interpretation of interest-free banking law. This encourages the banks to participate in various commercial activities. Second, the price setting policies of the central bank makes investment more...
متن کاملInvestigating Causal Relationship between Financial Development Indicators and Economic Growth: Toda and Yamamoto Approach
T he Causal relationship between financial development and economic growth has received divergent views in the literature under the traditional Granger approach to causality using data from various countries. The more recent Toda and Yamamoto and Dolado and Lütkepohl (TYDL) approach to causality were used to investigate the causal relationship between financial development and econom...
متن کاملReal and Financial Development Traps
The direction of causality between financial intermediation and real economic progress has been a source of discussion over long periods of time. Instead of exogenously siding with one particular direction a priori, this paper provides a different treatment on this debate by considering the interaction between financial and real sectors to be not just a question of causality, but an issue of co...
متن کاملInvestigating the Effects of Financial Repression on Private Investment in Agriculture Sector
One of the present phenomena that virtually explain weaknesses in financial systems of different countries is financial repression. Financial repression encompasses the different interferences of governments in financial markets through determining the ceiling interest on bank deposits, high rates of legal reserves, and the government’s interference in distribution of bank credits,which prevent...
متن کامل