The Finance and Growth Nexus Re-Examined: Do All Countries Benefit Equally?

Adolfo Barajas, Ralph Chami and Seyed Reza Yousefi

No 2013/130, IMF Working Papers from International Monetary Fund

Abstract: A large theoretical and empirical literature has focused on the impact of financial deepening on economic growth throughout the world. This paper contributes to the literature by investigating whether this impact differs across regions, income levels, and types of economy. Using a rich dataset for 150 countries for the period 1975–2005, dynamic panel estimation results suggest that the beneficial effect of financial deepening on economic growth in fact displays measurable heterogeneity; it is generally smaller in oil exporting countries; in certain regions, such as the Middle East and North Africa (MENA); and in lower-income countries. Further analysis suggests that these differences might be driven by regulatory/supervisory characteristics and related to differences in the ability to provide widespread access to financial services.

Keywords: WP; MENA country; private sector; banking system; dependent variable; Growth; Financial Development; Inclusive Growth; Financial Access; MENA region; credit-GDP ratio; MENA growth underperformance; x Middle East and North Africa; x GCC; GCC grouping; MENA depth; banking sector; number of observation; bank financing; oil GDP; Credit; Oil; Personal income; Stock markets; Commercial banks; Central Asia; Sub-Saharan Africa; North Africa; Middle East; East Africa (search for similar items in EconPapers)
Pages: 47
Date: 2013-05-29
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Citations: View citations in EconPapers (65)

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Journal Article: The Finance and Growth Nexus Re-Examined: Do All Countries Benefit Equally? (2016)
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