Growth, bank credit, and inflation in Mexico: evidence from an ARDL-bounds testing approach

Miguel Tinoco-Zermeño (), Francisco Venegas-Martínez and Víctor Torres-Preciado ()
Authors registered in the RePEc Author Service: Víctor Hugo Torres Preciado

Latin American Economic Review, 2014, vol. 23, issue 1, 1-22

Abstract: This paper explores the long-run effects of inflation on the dynamics of private sector bank credit and economic growth in Mexico over the period 1969–2011. With an ARDL-type model, the statistical results suggest that the availability of private sector bank credit in the economy exerts a positive impact on real GDP. In addition, inflation rates have contributed negatively to the increase in private credit, liquid liabilities, and financial development. A key outcome is that one percent increase in inflation is associated with a 0.07 % fall in long-run real rate of output through its effect on bank credit to the private sector. Another crucial finding is that policies of financial liberalization have helped stimulate economic growth. Reinforcing the literature on finance and growth, this study reaffirms that inflation rates are detrimental to long-run financial development and economic growth. Copyright The Author(s) 2014

Keywords: Inflation; Private sector bank credit; Financial development; Growth; E31; G21; E44; O4; C22 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://hdl.handle.net/10.1007/s40503-014-0008-0 (text/html)
Access to full text is restricted to subscribers.

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:spr:laecrv:v:23:y:2014:i:1:p:1-22

Ordering information: This journal article can be ordered from
http://www.springer.com/economics/journal/40503

DOI: 10.1007/s40503-014-0008-0

Access Statistics for this article

Latin American Economic Review is currently edited by Susan W. Parker, Kaniska Dam and Gonzalo Castañeda

More articles in Latin American Economic Review from Springer, Centro de Investigaciòn y Docencia Económica (CIDE)
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().