Who benefits from financial development? New methods, new evidence

Daniel J. Henderson, Chris Papageorgiou, Christopher Parmeter

Research output: Contribution to journalArticle

38 Citations (Scopus)

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.

Original languageEnglish (US)
Pages (from-to)47-67
Number of pages21
JournalEuropean Economic Review
Volume63
DOIs
StatePublished - Oct 1 2013

Fingerprint

Financial development
Low-income countries
Low income
Nonlinearity
Economic growth
Financial reform
Kernel methods
Endogenous regressors
Policy analysis

Keywords

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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

Cite this

Who benefits from financial development? New methods, new evidence. / Henderson, Daniel J.; Papageorgiou, Chris; Parmeter, Christopher.

In: European Economic Review, Vol. 63, 01.10.2013, p. 47-67.

Research output: Contribution to journalArticle

Henderson, Daniel J. ; Papageorgiou, Chris ; Parmeter, Christopher. / Who benefits from financial development? New methods, new evidence. In: European Economic Review. 2013 ; Vol. 63. pp. 47-67.
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