Linking the missing market: The effect of bond markets on economic growth

Patara Thumrongvit, Yoonbai Kim () and Chong Soo Pyun

International Review of Economics & Finance, 2013, vol. 27, issue C, 529-541

Abstract: Past studies have largely focused on the positive role of banks and stock markets on economic growth. This paper adds bond markets as a third key component of the financial system. Using a panel data set of 38 countries, and applying the generalized method of moments techniques for dynamic panels, we find that (i) stock market development is positively related to economic growth; (ii) the contributing role of bank credit to economic growth diminishes as domestic bond markets develop; (iii) government bonds are positively related to economic growth, while the effects of corporate bonds change from negative to positive, as domestic financial structures expand in size and diversity.

Keywords: Financial market; Economic growth; Panel data analysis; Bond markets (search for similar items in EconPapers)
JEL-codes: G2 O1 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (33)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:27:y:2013:i:c:p:529-541

DOI: 10.1016/j.iref.2013.01.008

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