Financial development and economic growth in Brazil: A Non-linear ARDL approach

Clement Moyo, Hlalefang Khobai, Nwabisa Kolisi and Zizipho Mbeki

MPRA Paper from University Library of Munich, Germany

Abstract: Financial intermediation through the banking system plays an important role in economic development through the allocation of savings, thus improving productivity, and ultimately increasing the rate of economic growth. This paper examines the interrelationships between financial development and economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model for Brazil. The time component of the study’s database is 1985 – 2015 inclusive. The study focused on the banking sector and stock market indicators of financial developments. The empirical results suggest that the banking sector measures of financial development have a negative relationship with economic growth while the financial development indicators representing stock market development are positively related to economic growth. The study also established an evidence of a long run and short run asymmetric relationship between financial development and growth. The empirical results open new insights for policy makers for long run and sustainable economic development.

Keywords: Financial development; economic growth; Non-linear ARDL; Brazil (search for similar items in EconPapers)
JEL-codes: C13 C22 G20 G21 (search for similar items in EconPapers)
Date: 2018-03-16
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Financial develpoment and economic growth in Brazil: A non-linear ARDL approach (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:85252

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