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Financial develpoment and economic growth in Brazil: A non-linear ARDL approach

Clement Moyo, Hlalefang Khobai, Nwabisa Kolisi () and Zizipho Mbeki ()
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Nwabisa Kolisi: Department of Economics, Nelson Mandela University
Zizipho Mbeki: Department of Economics, Nelson Mandela University

No 1811, Working Papers from Department of Economics, Nelson Mandela University

Abstract: Financial intermediation through the banking system plays an important role in economic development through the allocation of savings, thus improving productivity, and ultimately increasing the rate of economic growth. This paper examines the interrelationships between financial development and economic growth using the Nonlinear Autoregressive Distributed Lag (NARDL) model for Brazil. The time component of the study’s database is 1985 – 2015 inclusive. The study focused on the banking sector and stock market indicators of financial developments. The empirical results suggest that the banking sector measures of financial development have a negative relationship with economic growth while the financial development indicators representing stock market development are positively related to economic growth. The study also established an evidence of a long run and short run asymmetric relationship between financial development and growth. The empirical results open new insights for policy makers for long run and sustainable economic development.

Keywords: Financial development; economic growth; Non-linear ARDL; Brazil. (search for similar items in EconPapers)
JEL-codes: C13 C22 G20 G21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-03, Revised 2018-03
New Economics Papers: this item is included in nep-cfn and nep-fdg
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Citations: View citations in EconPapers (1)

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