Re-examining the effect of financial markets and institutions on economic growth: evidence from the OECD countries

Kulvinder Purewal and Hazwan Haini
Additional contact information
Kulvinder Purewal: University of Leicester

Economic Change and Restructuring, 2022, vol. 55, issue 1, No 10, 333 pages

Abstract: Abstract This study re-examines the impact of financial structure on economic growth for 24 advanced OECD countries from 1980 to 2017 using dynamic panel estimators. Previous literature suggests that financial development can promote economic growth; however, recent literature has expressed skepticism toward the finance-growth nexus. This paper employs financial development indices that capture the multidimensional nature of finance, which considers the accessibility, depth and efficiency of financial markets and institutions, as well as alternative financial development measures such as financial globalisation. The results show that financial markets and financial institutions promote economic growth; however, the effect of financial markets on growth is weaker. Interestingly, the results indicate an inverse U-shaped relationship between overall financial development and economic growth. Equally important, financial globalisation is also positive and significant to growth and indicates a nonlinear relationship. However, the impact of external finance from financial globalisation is weaker compared with overall financial development. Policy implications are discussed.

Keywords: Economic growth; Financial development; Institutions; OECD (search for similar items in EconPapers)
JEL-codes: E44 G00 O40 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://link.springer.com/10.1007/s10644-020-09316-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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: https://EconPapers.repec.org/RePEc:kap:ecopln:v:55:y:2022:i:1:d:10.1007_s10644-020-09316-2

Ordering information: This journal article can be ordered from
http://www.springer. ... nt/journal/10644/PS2

DOI: 10.1007/s10644-020-09316-2

Access Statistics for this article

Economic Change and Restructuring is currently edited by George Hondroyiannis

More articles in Economic Change and Restructuring from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().