Financial Intermediary Development and Output Fluctuations: A Dynamic Panel Data Analysis on ASEAN-5 Plus 3

Kin-Boon Tang () and Hui-Boon Tan
Additional contact information
Kin-Boon Tang: Nottingham University Business School - Malaysia Campus, http://www.nottingham.edu.my/nubs/

No 2008-06, NUBS Malaysia Campus Research Paper Series from Nottingham University Business School Malaysia Campus

Abstract: This paper examines the direct and indirect effects of financial intermediary development on output fluctuations based on the theoretical works by Bacchetta and Caminal (2000) and Beck, Lundberg and Majnoni (2006). According to credit market imperfections, well-developed financial intermediaries dampen the effect of real sector shocks and magnify the effect of monetary shocks on output fluctuations. This paper examines whether financial intermediaries serve as shock absorbers or shock magnifiers that mitigate or amplify the effect of real and monetary shocks on output fluctuations. Using data from 8 countries of ASEAN-5 Plus 3, the empirical results indicate that (1) there is strong and robust evidence for the dampening effect of financial intermediary development on output fluctuations via the propagation of real shocks, (2) there is somewhat weak evidence for the magnifying effect of financial intermediary development via the propagation of monetary shocks and (3) financial intermediary development has strong direct impact on output fluctuations if countries are bankdependent in the cointegration regression.

Keywords: Panel cointegration; Financial development; Output fluctuations (search for similar items in EconPapers)
Date: 2008-07
New Economics Papers: this item is included in nep-fdg and nep-mac
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ssrn.com/abstract=1160181

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nom:nubsmc:2008-06

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in NUBS Malaysia Campus Research Paper Series from Nottingham University Business School Malaysia Campus Contact information at EDIRC.
Bibliographic data for series maintained by Rasyad A. Parinduri ().