The Finance-Growth Nexus: Market Economies vs. Transition Countries

46 Pages Posted: 6 Dec 2005

See all articles by Gerhard Fink

Gerhard Fink

Dept of International Business and Trade

Peter R. Haiss

WU Vienna University of Economics and Business; UniCredit Bank Austria; IES Vienna - Institute for the International Education of Students

Hans C. Mantler

Vienna University of Economics and Business - Research Institute for European Affairs (IEF)

Date Written: February 2005

Abstract

Applying a growth accounting framework and a wide range of static and dynamic panel data estimators on a panel covering 22 market economies and 11 transition countries over 1990-2001, we find a weak and fragile finance-growth link in market economies, but strong financial sector-induced short-run growth effects in transition countries. The main growth effect hereby runs via the productivity channel. Parametric heterogeneity and financial structure seem to play a more important role than hitherto assumed: The financial sector and its different segments trigger different growth effects in different countries.

Keywords: financial sector, economic growth, transition economies, market economies

JEL Classification: G10, G21, O11, O16

Suggested Citation

Fink, Gerhard and Haiss, Peter R. and Mantler, Hans C., The Finance-Growth Nexus: Market Economies vs. Transition Countries (February 2005). Available at SSRN: https://ssrn.com/abstract=863424 or http://dx.doi.org/10.2139/ssrn.863424

Gerhard Fink (Contact Author)

Dept of International Business and Trade ( email )

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Peter R. Haiss

WU Vienna University of Economics and Business ( email )

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Vienna, A-1020
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UniCredit Bank Austria ( email )

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IES Vienna - Institute for the International Education of Students

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Hans C. Mantler

Vienna University of Economics and Business - Research Institute for European Affairs (IEF) ( email )

Forschungsinstitut fuer Europafragen
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A-1090 Vienna
Austria

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