Private Investment and Financial Development

Yongfu Huang
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Yongfu Huang: University of Cambridge

Chapter 3 in Determinants of Financial Development, 2011, pp 64-100 from Palgrave Macmillan

Abstract: Abstract In recent decades there has been a large body of literature studying the substantial roles that investment and financial development play in long-run economic growth (Levine and Renelt, 1992; King and Levine, 1993 among others). This chapter aims to provide an exhaustive analysis of the existence of and directions of causality between these two important aspects of economic activities, namely aggregate private investment and financial development. By exploiting the time series variation in both private investment and financial development, and allowing for global interdependence and heterogeneity across countries, this chapter suggests positive causal effects going in both directions.

Keywords: Financial Development; Private Investment; Panel Unit Root Test; Cross Section Dependence; Idiosyncratic Component (search for similar items in EconPapers)
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30249-5_3

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DOI: 10.1057/9780230302495_3

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