EconPapers    
Economics at your fingertips  
 

Relationship Between Financial Development and Economic Growth, Evidence from Financial Crisis

Narcise Amin Rashti, Ebrahim Siami Araghi and Mahdi Shayeste
Additional contact information
Narcise Amin Rashti: Department of economics, Azad Islamic University, Centeral Tehran Branch, Tehran Iran.
Ebrahim Siami Araghi: Department of economics, Allameh Tabtabae University, Tehran, Iran
Mahdi Shayeste: Department of economics, Azad Islamic University, Centeral Tehran Branch, Tehran Iran

Asian Economic and Financial Review, 2014, vol. 4, issue 7, 930-940

Abstract: This research studies the influence of financial development on economic growth with emphasis on the recent financial crisis. Variables considered in this study are indicators of financial development consisting of the ratio of the banking system credits to GDP, the ratio of services provided by the banking system to the private sector to GDP and the stock exchange to GDP, and variables of effective economy such as the ratio of investment to GDP and the openness of the economy and also the dummy variable of 2008 financial crisis. Starting from the Unites States and then taking the whole economy in the world, the recent financial crisis has had different effects on countries’ economy. In order to survey the effects of this crisis on economic growth of different states based on the World Bank classification, three groups of countries have been studied: developed countries members of the OECD, high average income countries and low average income countries. The results of the models estimated using generalized methods of moments demonstrate that the financial crisis has had the most influence on developing countries with high average income and its effect has been less on developed countries and developing countries with low and middle average income. Moreover, indexes of financial development considered in banking sector have had negative effect on all supposed countries, but capital market shows positive effect on economic growth during 1990-2010 in the countries with low average income and negative effect on developed and high average income countries.

Keywords: Economic growth; Financial development; Financial crisis. (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

Downloads: (external link)
http://www.aessweb.com/download.php?id=2657 (application/pdf)
http://www.aessweb.com/journals/5002/July2014 (text/html)

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:asi:aeafrj:2014:p:930-940

Access Statistics for this article

Asian Economic and Financial Review is currently edited by Dr. Qazi Muhammad Adnan Hye

More articles in Asian Economic and Financial Review from Asian Economic and Social Society 2637 E Atlantic Blvd #43110 Pompano Beach, FL 33062, USA.
Bibliographic data for series maintained by Chan Hoi Yan ().

 
Page updated 2019-08-25
Handle: RePEc:asi:aeafrj:2014:p:930-940