The Impact of Financial Development on Domestic Investment: A Quantile Regression Approach

Indian Macroeconomics Annual, 2009, 6, 107 -130

19 Pages Posted: 25 Jan 2013

See all articles by Nabamita Dutta

Nabamita Dutta

University of Wisconsin, La Crosse

Sanjukta Roy

World Bank

Date Written: May 2009

Abstract

This paper presents an interesting analysis of the role of financial development in boosting domestic investment of a country. The findings of the paper show that the responsiveness of investment to developments in the financial sector is conditional on the investment climate already in place. The need for a well developed financial system is the most for countries who have low investment. Countries with high levels of investment have lesser need for such an infrastructure. We adopt a quantile regression methodology in a dynamic panel set up to explore our hypothesis. The results are based on a broad sample of developed and developing countries over a period of 24 years.

Keywords: domestic savings, financial development, panel data

JEL Classification: O10, O12, F01

Suggested Citation

Dutta, Nabamita and Roy, Sanjukta, The Impact of Financial Development on Domestic Investment: A Quantile Regression Approach (May 2009). Indian Macroeconomics Annual, 2009, 6, 107 -130. Available at SSRN: https://ssrn.com/abstract=2206451

Nabamita Dutta (Contact Author)

University of Wisconsin, La Crosse ( email )

Dept. of Economics, 1725 State Street
La Crosse, WI 54601
United States
6087855294 (Phone)

Sanjukta Roy

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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