nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2015‒02‒28
three papers chosen by
Iulia Igescu
Ministry of Presidential Affairs

  1. Financial Fragmentation and Economic Growth in Europe By Isabel Schnabel ; Christian Seckinger
  2. Causal relationship between financial depth and economic growth: evidence from Asia-Pacific Countries By M. Sani,, Nur Fatin Najwa ; Ismail, Fathiyah ; W. Mahmood, Wan Mansor
  3. Financial Development and Economic Growth in ASEAN: Evidence from Panel Data By Lerohim, Siti Nor FarahEffera ; Affandi, Salwani ; W. Mahmood, Wan Mansor

  1. By: Isabel Schnabel ; Christian Seckinger (Department of Economics, Johannes Gutenberg-Universitaet Mainz, Germany )
    Abstract: Using industry data from Eurostat and applying the Rajan-Zingales methodology, we investigate the real growth effects of banking sector integration in the European Union. Our sample stretches from 2000 until 2012 and includes the phase of rapid financial integration before the crisis as well as the following phase of financial fragmentation and bank deleveraging. We find evidence that banking sector integration had a more than four times stronger growth effect during the crisis than in normal times. Growth effects are also stronger in times of domestic bank deleveraging. We conclude that concerns of European policy makers about fragmentation in the European banking sector are justified and that future reintegration is an important building block of future growth perspectives in the European Union.
    Keywords: Financial fragmentation; financial integration; foreign banks; crossborder lending; economic growth; financial crisis; Rajan-Zingales methodology
    JEL: F36 G01 G15
    Date: 2014–02–13
  2. By: M. Sani,, Nur Fatin Najwa ; Ismail, Fathiyah ; W. Mahmood, Wan Mansor
    Abstract: This study investigates the causality between financial depth and the economic performance of five selected large Asia-Pacific Countries consisting of China, India, Korea, Australia and New Zealand. Using pooled OLS regression for 20 year period annual data (1991-2012), the study finds bi-directional long-run causality between financial depth and economic growth. The study also find that ancillary variables such as inflation and investment share significant and positively caused economic growth. However, when financial depth become dependent variable only investment share provide clear relationship. The important implication for policy maker is that they should either improved financial markets or economic activities for future development and sustainability.
    Keywords: : Economic growth, financial depth, investment share, inflation, Asia- Pacific Countries
    JEL: G1 G15 O16 O2
    Date: 2014–09–25
  3. By: Lerohim, Siti Nor FarahEffera ; Affandi, Salwani ; W. Mahmood, Wan Mansor
    Abstract: The objective of this paper is to examine the influence of financial development consisting of financial depth, investment share and inflation on economic growth of ASEAN during 2002 through 2011. Using the fixed effect panel data OLS regression estimations, the study shows that share investment and inflation plays an important role in explaning real output. However, it is quite surprise to see that financial depth does not have any significant contribution toward real output. The findings is very important to policymaker for the ASEAN. They should aim at improving capital market environment and at the same time try reducing inflation rate to a level that can be sustainable for their future economic growth.
    Keywords: Economic growth, Financial depth, Investment share, Inflation, Association of Southeast Asian Nations (ASEAN).
    JEL: G0 G1 G2
    Date: 2014–09–25

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