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 data set 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 the degree of competition, and related to differences in the ability to provide widespread access to financial services.
Cover Page Footnote
The authors thank Camelia Minoiu, Romain Ranciere, Ratna Sahay, Era Dabla-Norris, Thorsten Beck, Javier Albarracín Corredor, anonymous reviewers, and seminar participants at the Middle East and Central Asian Department and at the joint IMF, World Bank, CFSP, and DFID Conference on “Financial Deepening, Macro-Stability, and Growth in Developing Countries” for very helpful comments on previous drafts. The paper is part of a research project on macroeconomic policy in low-income countries supported by the United Kingdom’s Department for International Development (DFID).
Recommended Citation
Barajas, Adolfo; Chami, Ralph; and Yousefi, Seyed Reza
(2016)
"The Finance and Growth Nexus Re-Examined:
Do All Countries Benefi t Equally?,"
Journal of Banking and Financial Economics: Vol. 2016:
No.
5, Article 2.
DOI: 10.7172/2353-6845.jbfe.2016.1.1
Available at:
https://press.wz.uw.edu.pl/jbfe/vol2016/iss5/2
First Page
5
Last Page
38
Page Count
38
Received Date
University of Warsaw
Revised Date
24 March 2015
Accept Date
8 October 2015
Online Available Date
16 November 2015
DOI
10.7172/2353-6845.jbfe.2016.1.1
JEL Code
G2; O0; O4; O5; O53
Publisher
16 November 2015