Growth Model with Financial Deepening and Productivity Heterogeneity

Nguyen, Quoc Hung

doi:10.1111/jere.12180

Cited by 11 publications

(8 citation statements)

References 33 publications

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“…Theoretical literature regarding financial development and economic growth was not much cited before the 1990s even though some economists, such as Schumpeter (1911), emphasized the importance of financial development on economic growth. Some of the studies have findings that support to the supplyleading hypothesis meaning that the capital market development leads to economic growth (Nguyen, 2019;Omri, et al, 2015). On the other hand, studies by Ho and Odhiambo (2013) and Helhel (2018) found support to demand-following hypothesis meaning that economic growth leads to capital market development.…”

Section: Literature Reviewmentioning

confidence: 97%

Capital Market Linkage to Economic Growth in Nepal

Pokharel¹

2020

WIJAR

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This article examines the causal relationship between capital market development and economic growth in Nepal using annual time series data from 1994-2019. Total market capitalization is used as a proxy of secondary market development and the total public issue of securities in a particular year is taken as an indicator of primary market development. Using the Johansen cointegration test and vector error correction method (VECM) in regression analysis, the study reveals that capital markets in Nepal are supporting economic growth through efficient fundraising, efficient allocation of resources, fair price determination and liquidity. The findings from this study conclude that there is a unidirectional causality running from capital market development to economic growth in both the long-run and short-run. However, this study found no support for causality running from economic growth to the capital market. Therefore, the findings from this study recommend policies that increase the reach of the capital market to small and medium enterprises (SMEs) and individual investors. Keywords: capital market, market capitalization, primary market, economic growth, Nepal

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Section: Literature Reviewmentioning

confidence: 97%

Capital Market Linkage to Economic Growth in Nepal

Pokharel¹

2020

WIJAR

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“…Moreover, Arcand et al (2015) and Cecchetti and Kharroubi (2015) also show amended financial sector development effort on real economic growth. However, Nguyen (2019) argued that Institutional quality obstructs the positive influence of FDI and integration on economic growth, while progression can relieve the combat brought by trade openness in the areas FDIs operate to elevate their spill-over effect. Similarly, Robinson (1952) and Kuznets (1955) and then Friedman and Schwartz (1963b) sponsor that financial system development augments economic growth.…”

Section: Review Of Literaturementioning

confidence: 99%

“…Moreover, Arcand, Berkes, and Panizza (2015) and Cecchetti and Kharroubi (2015) show that improved financial sector development can cause a drag on real economic growth. Institutional quality encumbers the positive possessions of foreign direct investment and the trade openness on economic growth, while progression can alleviate the struggle fetched by trade openness to the extents FDIs rheostat to heighten their spill-over effect (Nguyen, 2019). High-quality institutional environment help stimulate the level of financial markets (Konadu-Agyemang, 2018).…”

Section: Introductionmentioning

confidence: 99%

Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies

Khan

Zhong

2020

Global Business Review

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Using a panel data set of 189 countries by employing dynamic models OLS, fixed effect, random effect and generalized method of moments (GMM) estimators. The study revisits the relationship between institutional quality and financial development in developing and emerging countries. This study is ever the first comprehensive and wide-ranging that categorizes the countries into developing and emerging countries using multiple dynamic approaches. Experimental findings of the study are based on GMM, which indicates that better institutions are important for financial development, specifically political stability, control of corruption and regulatory quality positively affect financial development in the global panel of the study. Rule of law negatively affects financial development, which reveals that in most of the global countries, the rule of law is very feeble. Control of corruption index is positively effecting financial development in emerging and global panel which indicates that most of the countries have reduced corruption to low level. The current study also found that emerging countries have reduced corruption, but other institutional indicators are found to be insignificant. The overall result concludes that good quality institutions are the main drivers of financial development and it stimulates financial development. The present study suggests that developing and emerging countries should focus to improve the institutional quality by re-examining the rules of law, government effectiveness and voice accountability institutional factors to make it better.

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“…As the phenomenon of financialisation results in various economic outcomes and changes, it can have not only a positive (Williams 2019;He et al 2019;Nguyen 2019;Guru and Yadav 2019;Nazir et al 2020) but also a negative (Law and Singh 2014;Arcand et al 2015;Ibrahim and Alagidede 2018) effect on economic growth in the long run, and this effect can be heterogeneous. The impact of financialisation on economic growth is underpinned by a lot of research covering different panels of countries.…”

Section: Introductionmentioning

confidence: 99%

The Heterogeneous Impact of Financialisation on Economic Growth in the Long Run

Setikiene

Butkus

2021

JRFM

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Financialisation, i.e., the process by which financial markets and their participants gain more influence over the functioning of enterprises/companies and the framework of the financial system, changes the functioning of the economic system, both at the macro- and microeconomic level. There is no doubt that financialisation impacts economic growth. Still, research does not substantiate the heterogeneity of financialisation effects and does not provide a comprehensive analysis of the sources of heterogeneity. In most cases, researchers provide only theoretical insights into what may lead to different effects of financialisation on economic growth. This study empirically examines whether institutional quality and economic development intermediate the relationship between financialisation and economic growth using a panel of 96 countries over the period of 1996–2017 and least squares dummy variables (LSDV) estimator. We found that the impact of financialisation on economic growth differs across countries and that institutional quality and economic development are the sources of the heterogeneous impact of financialisation on economic growth.

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Growth Model with Financial Deepening and Productivity Heterogeneity

Cited by 11 publications

References 33 publications

Capital Market Linkage to Economic Growth in Nepal

Capital Market Linkage to Economic Growth in Nepal

Institutional Quality and Financial Development: Evidence from Developing and Emerging Economies

The Heterogeneous Impact of Financialisation on Economic Growth in the Long Run

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