Who Benefits from Financial Development? New Methods, New Evidence

Daniel Henderson (), Chris Papageorgiou () and Christopher Parmeter

No 2013-07, Working Papers from University of Miami, Department of Economics

Abstract: This paper takes a fresh look at the impact of financial development on economic growth by using recently developed kernel methods that allow for heterogeneity in partial effects, nonlinearities, and endogenous regressors. Our results suggest that while the positive impact of financial development on growth has increased over time, it is also highly nonlinear with more developed nations benefiting while low-income countries do not benefit at all. We also conduct a novel policy analysis that confirms these statistical findings. In sum, this set of results contributes to the ongoing policy debate as to whether low-income nations should scale up financial reforms.

Keywords: Country heterogeneity; financial development; growth; nonlinearities; nonparametric regression; irrelevant variables (search for similar items in EconPapers)
JEL-codes: C14 O16 O47 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2012-10-15
New Economics Papers: this item is included in nep-fdg and nep-mfd
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Citations: View citations in EconPapers (5)

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Journal Article: Who benefits from financial development? New methods, new evidence (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:mia:wpaper:2013-07

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