What is the impact of financial depth on economic growth within middle income countries?

Abdulaleem Isiaka, Abdulqudus Isiaka, Abdulqadir Isiaka and Omotomiwa Adenubi
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Abdulaleem Isiaka: Department of Economics, University of Reading, Reading, PO Box 218 Reading, RG6 6AA, United Kingdom
Abdulqudus Isiaka: Department of Business Administration, Nile University of Nigeria, Abuja, Nigeria
Abdulqadir Isiaka: Department of Business Administration, Nile University of Nigeria, Abuja, Nigeria
Omotomiwa Adenubi: Department of Economics, University of New England, Armidale 2350, Australia

International Journal of Research in Business and Social Science (2147-4478), 2021, vol. 10, issue 1, 122-130

Abstract: This paper utilizes the Least Squares Dummy Variables (LSDV) technique in investigating the effect of financial depth on economic growth within a sample of middle-income countries, over the period 2005–2017. The research finds that financial depth has a negative impact on real GDP growth within middle-income countries. This result is robust to the use of alternative measures of financial depth, the use of per capita GDP growth as a proxy for economic growth, the inclusion of dummy variables to control for the 2007–2010 global financial crisis, the exclusion of countries with high average growth as well as across income levels. Based on its findings, this study recommends the need for robust regulations to ensure that the credit facilities of domestic financial institutions are channeled towards productive investments rather than debt servicing. Key Words: Financial Depth, Economic Growth, Middle-Income Countries, LSDV

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:rbs:ijbrss:v:10:y:2021:i:1:p:122-130

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