Financial development, real sector, and economic growth

Ductor, Lorenzo and Grechyna, Daryna (2015) Financial development, real sector, and economic growth. International Review of Economics and Finance, 37 . pp. 393-405. ISSN 1059-0560

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Abstract

This paper evaluates the interdependence between financial development and real sector output and the effect on economic growth. Using panel data for 101 developed and developing countries over the period 1970 to 2010, we show that the effect of financial development on economic growth depends on the growth of private credit relative to the real output growth. The findings also suggest that the effect of financial development on growth becomes negative, if there is rapid growth in private credit not accompanied by growth in real output. Our findings provide empirical evidence that supports the theories that postulate the existence of an optimal level of financial development given by the characteristics of an economy.

Item Type: Article
Additional Information: Available online 13 January 2015
Research Areas: A. > Business School > Economics
Item ID: 14525
Notes on copyright: From SHERPA/RoMEO: author can archive post-print (ie final draft post-refereeing) Author's post-print on open access repository after an embargo period of between 12 months and 48 months (36 months for this journal)
Useful Links:
Depositing User: Daryna Grechyna
Date Deposited: 27 Mar 2015 14:35
Last Modified: 19 Apr 2017 09:44
URI: http://eprints.mdx.ac.uk/id/eprint/14525

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