The finance and growth nexus revisited

Roland Beck, Georgios Georgiadis and Roland Straub

Economics Letters, 2014, vol. 124, issue 3, 382-385

Abstract: We find that an expansion of credit has a positive effect on per capita output growth only up to a point. Beyond this threshold the impact of finance on growth is not statistically significant anymore. We show, however, that the estimated non-linear relationship may stem from the omission of factors not considered in the literature so far. These factors may have a negative impact on growth in mature financial systems, and include the magnitude of financial cycles as well as the importance of non-intermediation activities in banks’ business models.

Keywords: Growth; Financial development; Dynamic panel data (search for similar items in EconPapers)
JEL-codes: G1 O4 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (84)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:124:y:2014:i:3:p:382-385

DOI: 10.1016/j.econlet.2014.06.024

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