TY - JOUR
T1 - Who benefits from financial development? New methods, new evidence
AU - Henderson, Daniel J.
AU - Papageorgiou, Chris
AU - Parmeter, Christopher F.
N1 - Copyright:
Copyright 2013 Elsevier B.V., All rights reserved.
PY - 2013/10
Y1 - 2013/10
N2 - 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.
AB - 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.
KW - Economic growth
KW - Financial development
KW - Heterogeneity
KW - Nonlinearities
KW - Nonparametric regression
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U2 - 10.1016/j.euroecorev.2013.05.007
DO - 10.1016/j.euroecorev.2013.05.007
M3 - Article
AN - SCOPUS:84880672926
VL - 63
SP - 47
EP - 67
JO - European Economic Review
JF - European Economic Review
SN - 0014-2921
ER -