Economics at your fingertips  

Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries

Nahla Samargandi (), Jan Fidrmuc and Sugata Ghosh ()

World Development, 2015, vol. 68, issue C, 66-81

Abstract: We revisit the relationship between financial development and economic growth in a panel of 52 middle-income countries over the 1980–2008 period. Using pooled mean group estimations in a dynamic heterogeneous panel setting, we show that there is an inverted U-shaped relationship between finance and growth in the long run. In the short run, the relationship is insignificant. This suggests that too much finance can exert a negative influence on growth in middle-income countries. The finding of a non-monotonic effect of financial development on growth is confirmed by estimating a threshold model.

Keywords: financial development; economic growth; pooled mean group estimation; dynamic panel threshold; non-monotonicity (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (67) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.worlddev.2014.11.010

Access Statistics for this article

World Development is currently edited by O. T. Coomes

More articles in World Development from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2020-02-28
Handle: RePEc:eee:wdevel:v:68:y:2015:i:c:p:66-81