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on Financial Development and Growth |
| By: | Dzmitry Kruk; Kiryl Haiduk |
| Abstract: | This study analyzes the effects of directed lending upon total factor productivity and GDP growth in Belarus over the period of 2000–2012. In theory, directed lending can enhance physical capital accumulation and make the access to credit easier, but empirical studies often show that it leads to unproductive hoarding of capital and financing of lower-yielding projects. This study seeks to explore which of these effects has dominated in the Belarusian economy during a last decade. We find that expansion of directed lending has negatively affected TFP dynamics and thus negatively contributed to the rates of economic growth. However, the detected negative impact of directed lending on total factor productivity was enfeebled by the expansion of market loans. In the future, this link between directed and market loans could cease to exit due to liquidity constraint commercial banks face. If continued, directed lending may cause a more severe negative impact on TFP, and consequently undermine long-run economic growth. |
| Keywords: | Belarus, financial repression, directed lending, economic growth, transition economies, cointegration, vector error-correction model |
| JEL: | C32 O16 P34 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:bel:wpaper:22&r=fdg |
| By: | Gurgul, Henryk; Lach, Łukasz |
| Abstract: | This paper examines the nexus between political instability and economic growth in 10 CEE countries in transition in the period 1990-2009. Our results support the contention that political instability defined as a propensity for government change had a negative impact on growth. On the other hand, there was no causality in the opposite direction. A sensitivity analysis based on the application of a few hundred different variants of the initial econometric model confirmed the abovementioned findings only in the case where major government changes were applied to the definition of political instability. |
| Keywords: | political instability, economic growth, CEE transition economies |
| JEL: | O1 O10 O4 O40 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52230&r=fdg |
| By: | Álvarez, Inmaculada (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Barbero, Javier (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.) |
| Abstract: | We propose a framework to analyze convergence between regions, incorporating the public sector and technological knowledge spillovers in the context of a Neoclassical Growth Model. Secondly, we apply novel estimation methods pertaining to the spatial econometrics literature introducing a spatial autoregressive panel data model based on instrumental variables estimation. Additionally, we introduce marginal effects associated with changing explanatory variables. Our model makes it possible to analyze, in terms of convergence, the results obtained in Spanish regions with the policies implemented during the period 1980-2007. The results support the idea that investments in physical, private and public capital, as well as in education have a positive effect on regional development and cohesion. Therefore, we can conclude that it is possible to obtain better results for regional convergence with higher rates of public investment. We also obtain interesting results that confirm the existence of spillover effects in economic growth and public policies, identifying their magnitude and significance. |
| Keywords: | speed of convergence; growth models; public policies. |
| JEL: | E13 H54 O41 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201307&r=fdg |
| By: | Asongu Simplice (Yaoundé/Cameroun) |
| Abstract: | Purpose – In a meta-study, we have bridged the gap between the pros and cons of a questionable finance-growth nexus. Design/methodology/approach – Over 20 fundamental characteristics that have influenced the debate over the last decades have been examined. The empirical evidence is based on 196 outcomes from 20 studies. We assess the degree of heterogeneity and identify causes of the observed differentiation. Findings – Our findings also show evidence of publication bias. Overall, a genuine effect exists between financial development and economic growth. A finance-growth nexus might not be appealing in our era because of: endogeneity-based estimations, publication bias and, effects of financial activity. A historical justification has also been discussed. Practical implications – Encouraging the publication of results with findings that are not consistent with the mainstream positive finance-growth nexus should provide new scholarly insights into the relationship. Depending on the specific context of sampled countries, the role of policy has also been to encourage financial development through measures that may expose countries to negative external shocks like financial crises. Policy makers that have been viewing the challenges of development exclusively from this point of view for the rewards of growth may not be getting the financial dynamics correctly. Originality/value – Very few meta-analysis studies have focused on the finance-growth nexus. |
| Keywords: | Meta analysis; Finance; Economic growth; Publication bias |
| JEL: | C1 C4 E0 O0 |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:agd:wpaper:13/029&r=fdg |
| By: | Manuk Ghazanchyan; Janet Gale Stotsky |
| Abstract: | This study examines the drivers of growth in Sub-Saharan African countries, using aggregate data, from the past decade. We correlate recent growth experience to key determinants of growth, including private and public investment, government consumption, the exchange regime and real exchange rate, and current account liberalization, using various econometric methodologies, including fixed and random effects models, with cluster-robust standard errors. We find that, depending on the specification, higher private and public investments boost growth. Some evidence is found that government consumption exerts a drag on growth and that more flexible exchange regimes are beneficial to growth. The real exchange rate and liberalization variables are not significant. |
| Keywords: | Economic growth;Sub-Saharan Africa;Private investment;Public investment;Foreign exchange;Exchange rate regimes;Real effective exchange rates;Sub-Saharan Africa, growth, exchange rate regimes, real exchange rate |
| Date: | 2013–11–22 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/236&r=fdg |
| By: | Ben Jelili, Riadh; Abdmoulah, Walid |
| Abstract: | Based on Aghion et al. (2005), this article provides new insights regarding whether financial development can affect economic growth non-linearly by adopting the concept of threshold effects. The empirical approach adopted in this article allows for the finance-growth relationship to be piecewise linear with a set of indicators including access to finance acting as a regime-switching trigger. Using cross-country observations from 144 countries stretching from 1985 to 2009, strong evidence of threshold effects in finance-growth link is found. It is suggested that financial development in general, and access to finance in particular, is among the important forces contributing to crosscountry (non)-convergences in growth rates. |
| Keywords: | Financial development, Access to finance, Economic growth, Threshold regression. |
| JEL: | C54 E20 |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:52221&r=fdg |