Financial and economic development in the context of the global 2008-09 financial crisis

Antonio Afonso and M. Carmen Blanco-Arana

International Economics, 2022, vol. 169, issue C, 30-42

Abstract: We revisit the relationship between economic growth and financial development in OECD/EU countries in the period 1990–2016, encompassing the 2008-09 Global Financial Crisis. We consider several variables of financial development to evaluate their influence on economic growth when they collectively interact in advanced economies. Thus, using a random effects model and the generalized method of moments (GMM), we find that an increase in domestic credit and market capitalisation, as well as the market turnover ratio of domestic shares, lead to a significant positive effect on GDP per capita. Furthermore, we find linear and non-linear impacts of financial development on economic growth. Other determinants are also highly significant for economic growth, such as expenditure on education, inflation, and unemployment rates.

Keywords: Financial development; Economic growth; Panel data; Random effects model; GMM; OECD; EU countries (search for similar items in EconPapers)
JEL-codes: C23 E51 F34 G01 O47 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inteco:v:169:y:2022:i:c:p:30-42

DOI: 10.1016/j.inteco.2021.11.006

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