Who benefits from financial development? New methods, new evidence

Daniel Henderson (), Chris Papageorgiou () and Christopher Parmeter

European Economic Review, 2013, vol. 63, issue C, 47-67

Abstract: This paper takes a fresh look at the impact of financial development on economic growth by using recently developed kernel methods that allow for heterogeneity in partial effects, nonlinearities and endogenous regressors. Our results suggest that while the positive impact of financial development on growth has increased over time, it is also highly nonlinear with more developed nations benefiting while low-income countries do not benefit at all. We also conduct a novel policy analysis that confirms these statistical findings. In sum, this set of results contributes to the ongoing policy debate as to whether low-income nations should scale up financial reforms.

Keywords: Economic growth; Financial development; Heterogeneity; Nonparametric regression; Nonlinearities (search for similar items in EconPapers)
JEL-codes: C14 O16 O47 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (60)

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Working Paper: Who Benefits from Financial Development? New Methods, New Evidence (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:eecrev:v:63:y:2013:i:c:p:47-67

DOI: 10.1016/j.euroecorev.2013.05.007

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