Financial Development and Economic Growth: New Evidence from Panel Data

NFI Working Paper No. 2007-WP-10

30 Pages Posted: 13 May 2007

See all articles by M. Kabir Hassan

M. Kabir Hassan

University of New Orleans - College of Business Administration - Department of Economics and Finance

Jung-Suk Yu

School of Urban Planning & Real Estate Studies, Dankook University

Date Written: March 2007

Abstract

This study provides new evidence on the role of financial development in accounting for economic growth. To derive feasible policy implications, we estimate not only unbalanced panel regressions with period fixed effects, but also variance decompositions of annual GDP growth rates to examine what proxy measures are most important in economic growth over time and how much they contribute to economic growth across geographic regions and income groups. We find strong linkages between financial development and economic growth in high-income OECD countries, but not in South Asian and Sub-Saharan African regions. Therefore, it may be necessary to make different efforts to achieve steady economic growth across geographic regions and income groups.

Keywords: economic growth, financial development

Suggested Citation

Hassan, M. Kabir and Yu, Jung-Suk, Financial Development and Economic Growth: New Evidence from Panel Data (March 2007). NFI Working Paper No. 2007-WP-10, Available at SSRN: https://ssrn.com/abstract=985889 or http://dx.doi.org/10.2139/ssrn.985889

M. Kabir Hassan (Contact Author)

University of New Orleans - College of Business Administration - Department of Economics and Finance ( email )

2000 Lakeshore Drive
New Orleans, LA 70148
United States

Jung-Suk Yu

School of Urban Planning & Real Estate Studies, Dankook University ( email )

152, Jukjeon-ro, Suji-gu, Yongin-si
Gyeonggi-do, 16890
Korea, Republic of (South Korea)

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