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The Hype of Social Capital in the Finance - Growth Nexus

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

No 21/050, Working Papers from European Xtramile Centre of African Studies (EXCAS)

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-gro, nep-isf and nep-sea
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Forthcoming: Economic Notes

Downloads: (external link) ... nce-Growth-Nexus.pdf Revised version, 2021 (application/pdf)

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