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The Hype of Social Capital in the Finance - Growth Nexus

Ibrahim Raheem (), Kazeem Ajide () and Xuan Vo
Additional contact information
Ibrahim Raheem: The EXCAS, Liege, Beligium
Xuan Vo: University of Economics Ho Chi Minh City, Vietnam

No 21/050, Working Papers of the African Governance and Development Institute. from African Governance and Development Institute.

Abstract: The trilogy among economic growth, social capital (SC), and financial development is examined based on three hypotheses: first, SC is important in the finance-growth nexus. Second, there is a threshold effect of SC in the finance-growth nexus. Third, the SC-finance-growth trilogy depends on the countries' income level. Building dataset for 70 countries,someinteresting results were obtained: (i) the marginal effects of both SC and finance promotes economic growth at higher levels; (ii)there is evidence of a threshold effect of SC, as finance enhances more growth when SC is below the threshold level; (iii) higher-income countries tend not to benefit from the SC-finance-growth trilogy. These results suggest that the influence of SC on growth trajectory is exaggerated in the literature. The study recommends that policymakers should pursue other sources of economic growth aside SC, while ensuring that the level of SC does not deteriorate.

Keywords: Economic growth; Financial development; Social capital; and Threshold effect (search for similar items in EconPapers)
JEL-codes: G20 O43 (search for similar items in EconPapers)
Pages: 29
Date: 2021-01
New Economics Papers: this item is included in nep-fdg, nep-isf and nep-sea
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Forthcoming: Economic Notes

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http://www.afridev.org/RePEc/agd/agd-wpaper/The-Hy ... nce-Growth-Nexus.pdf Revised version, 2021 (application/pdf)

Related works:
Journal Article: The hype of social capital in the finance‐growth nexus (2021) Downloads
Working Paper: The Hype of Social Capital in the Finance - Growth Nexus (2021) Downloads
Working Paper: The Hype of Social Capital in the Finance - Growth Nexus (2021) Downloads
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