nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2017‒11‒26
one paper chosen by
Georg Man

  1. Does Non-intermediation Activity Tell us more in the Finance-Growth Nexus? By Han Hou; Su-Yin Cheng

  1. By: Han Hou (Lunghwa University of Science and Technology); Su-Yin Cheng (Kainan University)
    Abstract: This paper provides new evidences on traditional finance-growth nexus via dividing financial services into intermediation and non-intermediation services and examines their relationships with economic growth. Applying time series cointegration techniques and Granger causality tests for eight OECD countries, several results are obtained. First, there exists a long-run equilibrium relationship among economic growth, intermediation activities, and non-intermediation activities in Austria, France, and Korea. Second, we find that financial intermediation services promote long-run economic growth in France and Korea, whereas non-intermediation services impede Austria?s long-term economic growth. Finally, the development of non-intermediation activities leads the development of intermediation activities in France and the Netherlands in the short-term. This paper emphasizes the importance of non-intermediation activities in the growth process and in the development of intermediation services as well.
    Keywords: financial Intermediation; non-intermediation; Economic growth; Causality
    JEL: C32 F30 G20
    Date: 2017–10

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