Financial Development, Macroeconomic Stability and Growth

Marie Silvere Mbome ()

Departmental Working Papers from Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano

Abstract: The present paper investigates the non-linear effects of financial development on economic growth, for a sample of 64 developed and developing countries from 1980 to 2010. Our analysis using traditional GMM techniques and panel smoothing transition regression model (PSTR), suggests that the benefits from financial development crucially depend on the level of economic and financial development. We find that, below a given level of income, financial development adversely affects growth. However, excessive finance tends to deter growth and increase macroeconomic instability.

Keywords: Financial development; Economic growth; PSTR (search for similar items in EconPapers)
JEL-codes: C24 G00 O47 (search for similar items in EconPapers)
Date: 2016-11-22
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Citations: View citations in EconPapers (1)

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