Financial Development and Aggregate Saving Rates: A Hump-Shaped Relationship

Wang, Pengfei; Xu, Lifang; Xu, Zhiwei

doi:10.2139/ssrn.2085277

Cited by 13 publications

(15 citation statements)

References 63 publications

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“…In line with this view, financial development initially spurs the latter by providing more saving instruments to households and firms, but eventually curbs incentives for precautionary savings. As a result, overall saving rates shrink (Wang et al, 2011). Beck (2002) empirically confirms the hypothesis that financial development is conducive to the comparative advantage in manufacturing industries, thereby increasing exports and trade openness.…”

Section: Literature Reviewsupporting

confidence: 52%

Causality between credit depth and economic growth: evidence from 24 OECD countries

Stolbov

2016

Empir Econ

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Section: Literature Reviewsupporting

confidence: 52%

Causality between credit depth and economic growth: evidence from 24 OECD countries

Stolbov

2016

Empir Econ

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“…In line with this view, financial development initially spurs the latter by providing more saving instruments to households and firms, but eventually curbs incentives for precautionary savings. As a result, overall saving rates shrink (Wang et al, 2011). Beck (2002) First, a Brock-Dechert-Scheinkman, or BDS, test (Brock, Dechert, Scheinkman, and LeBaron, 1996) is applied to examine all the series for signs of nonlinearity.…”

Section: Mikhail Stolbovmentioning

confidence: 99%

Causality between Credit Depth and Economic Growth: Evidence from 24 OECD Countries

Stolbov

2015

SSRN Journal

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Causality between the ratio of domestic private credit to GDP and growth in real GDP per capita is investigated in a country-by-country time-series framework for 24 OECD economies over the period 1980-2013. The proposed threefold methodology to test for causal linkages integrates (i) lag-augmented VAR Granger causality tests, (ii) Breitung-Candelon causality tests in the frequency domain, and (iii) testing for causal inference based on a fully modified OLS (FMOLS) approach. For 12 of 24 countries in the sample, the three tests yield uniform results in terms of causality presence (absence) and direction. Causality running from credit depth to economic growth is found for the UK, Australia, Switzerland, and Greece. The findings lend no support to the view that financial development shifts from a supply-leading to demand-following pattern as economic development proceeds. The aggregate results mesh well with the current discussion on "too much finance" and disintermediation effects. However, idiosyncratic country determinants also appear significant.

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“…Aside from demographic and GDP-related variables, financial sector development is also considered to be a crucial determinant of saving rates, but the direction of its impact is ambiguous theoretically as well as empirically. Wang, Xu, and Xu's (2011) theoretical analysis of the impact of financial sector development on the saving rate finds that, if both households and firms are subject to financial friction and if the financial sector development occurs first in the corporate sector and then spreads to the household sector (a likely scenario), then financial sector development will have a hump-shaped impact on the saving rate, initially increasing the saving rate by increasing firms' ability to borrow and invest but then reducing the saving rate by weakening the precautionary saving incentives of households. Turning to empirical studies, Loayza, et al (2000) as well as Horioka and Yin (2010) find that financial sector development has a negative impact on the saving rate, Park and Shin (2009) find that its impact is insignificant, and Wang, Xu, and Xu (2011) find a hump-shaped relationship.…”

Section: Estimation Model Of the Determinants Of Domestic Saving Ratesmentioning

confidence: 99%

Determinants and Long-Term Projections of Saving Rates in Developing Asia

Horioka

Terada-Hagiwara

2010

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. find that domestic saving rates in developing Asia have, in general, been high and rising but that there have been substantial differences from economy to economy and that the main determinants of these trends appear to have been the age structure of the population (especially the aged dependency ratio), income levels, and the level of financial sector development. We then project future trends in domestic saving rates in developing Asia for the 2011-2030 period based on our estimation results and find that the domestic saving rate in developing Asia as a whole will remain roughly constant during the next two decades despite rapid population aging in some economies in developing Asia because population aging will occur much later in other economies and because the negative impact of population aging on the domestic saving rate will be largely offset by the positive impact of higher income levels. Terms of use: Documents in

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Financial Development and Aggregate Saving Rates: A Hump-Shaped Relationship

Cited by 13 publications

References 63 publications

Causality between credit depth and economic growth: evidence from 24 OECD countries

Causality between credit depth and economic growth: evidence from 24 OECD countries

Causality between Credit Depth and Economic Growth: Evidence from 24 OECD Countries

Determinants and Long-Term Projections of Saving Rates in Developing Asia

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