Who benefits from financial development? New methods, new evidence

Daniel J. Henderson, Chris Papageorgiou, Christopher F. Parmeter

Research output: Contribution to journalArticlepeer-review

51 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)47-67
Number of pages21
JournalEuropean Economic Review
StatePublished - Oct 2013


  • Economic growth
  • Financial development
  • Heterogeneity
  • Nonlinearities
  • Nonparametric regression

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics


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