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A semi-parametric panel data analysis on financial development-economic volatility nexus in developing countries

Haykel Zouaoui (), Manel Mazioud and Nidhal Ziedi Ellouz

Economics Letters, 2018, vol. 172, issue C, 50-55

Abstract: This paper examines the effect of financial development on economic growth volatility in a sample of 50 developing countries from 1960 to 2016. Since no conclusive results have been provided by previous studies on such association, we employ a semi-parametric panel fixed-effects regression model as introduced by Baltagi and Li (2002). The semi-parametric model does not impose any functional restriction on the relationship between financial development and economic volatility and helps to capture the existence of non-linearities in the data. We find that the financial development-volatility relation is non linear with multiple turning points. Our findings make new evidences on the financial development-economic volatility nexus.

Keywords: Financial development; Economic growth volatility; Non-linearity; Developing countries; Semi-parametric analysis; Panel data (search for similar items in EconPapers)
JEL-codes: C14 F40 F63 F65 O5 (search for similar items in EconPapers)
Date: 2018
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