Financial Accessibility and Economic Growth
Journal of East Asian Economic Integration, Vol. 19, No. 2 (June 2015)
24 Pages Posted: 8 Jul 2015 Last revised: 6 Nov 2016
Date Written: June 30, 2015
This paper investigates the empirical evidence on the relationship between financial accessibility and economic growth to test the conventional hypothesis that improved financial accessibility leads to financial development and economic growth. First, we built a dynamic panel model on the relationship between financial accessibility and economic growth with a set of controlled variables. We then used several financial access indicators from 165 countries, collected from 2004 to 2011, applying the generalized method of moments (GMM) estimators to estimate their relationship. From these estimations, we found that high financial accessibility leads to high income in general. In addition, we found that an increase in financial access indicators had a greater impact on economic growth in low-income countries than it did on economic growth in high-income countries.
Keywords: Economic Growth, Financial Accessibility, Financial Services, Financial Systems, GMM
JEL Classification: G15, G17, O16
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