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Is the Financial Development and Economic Growth Relationship Nonlinear?

Author

Listed:
  • Thanasis Stengos

    (University of Guelph)

  • Andreas Savvides

    (Oklahoma State University)

  • Theofanis Mamuneas

    (University of Cyprus)

  • Elena Ketteni

    (University of Cyprus)

Abstract

Using nonparametric estimation techniques we find that, in contrast to recent research, the finance-growth relationship is linear when the previously documented nonlinearity between initial per capita income, human capital and economic growth is taken into account.

Suggested Citation

  • Thanasis Stengos & Andreas Savvides & Theofanis Mamuneas & Elena Ketteni, 2007. "Is the Financial Development and Economic Growth Relationship Nonlinear?," Economics Bulletin, AccessEcon, vol. 15(14), pages 1-12.
    • Handle: RePEc:ebl:ecbull:eb-07o10010
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    Cited by:

    1. Michael Polemis & Dr Aikaterina Oikonomou, 2022. "A note on the human capital and tourism growth nexus: a semi-parametric approach," Economics and Business Letters, Oviedo University Press, vol. 11(2), pages 79-87.
    2. Chung-Hua Shen & Chien-Chiang Lee & Shyh-Wei Chen & Zixiong Xie, 2011. "Roles played by financial development in economic growth: application of the flexible regression model," Empirical Economics, Springer, vol. 41(1), pages 103-125, August.
    3. Eggoh C. Jude, 2010. "Financial Development And Growth: A Panel Smooth Regression Approach," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 35(1), pages 15-33, March.
    4. Dirk Bezemer & Maria Grydaki & Lu Zhang, 2016. "More Mortgages, Lower Growth?," Economic Inquiry, Western Economic Association International, vol. 54(1), pages 652-674, January.
    5. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    6. Muhammad Shahbaz & Muhammad A. Nasir & Amine Lahiani, 2022. "Role of financial development in economic growth in the light of asymmetric effects and financial efficiency," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 361-383, January.
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    8. Herwartz, Helmut & Walle, Yabibal M., 2014. "Determinants of the link between financial and economic development: Evidence from a functional coefficient model," Economic Modelling, Elsevier, vol. 37(C), pages 417-427.
    9. Umut Oguzoglu & Thanasis Stengos, 2011. "Can Dynamic Panel Data Explain the Finance-Growth Link? An Empirical Likelihood Approach," Review of Economic Analysis, Digital Initiatives at the University of Waterloo Library, vol. 3(2), pages 129-148, October.
    10. Georg Man, 2015. "Bank Competition, Economic Growth, and Nonlinearity: A Nonparametric Approach," Scottish Journal of Political Economy, Scottish Economic Society, vol. 62(3), pages 310-324, July.
    11. Charalampos Agiropoulos & Michael L. Polemis & Michael Siopsis & Sotiris Karkalakos, 2022. "Revisiting the finance‐growth nexus: A socioeconomic approach," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 2762-2783, July.
    12. Jude Eggoh, 2012. "Inflation Effects on Finance-Growth Link: A Panel Smooth Threshold Approach," International Economic Journal, Taylor & Francis Journals, vol. 26(4), pages 711-725, June.
    13. Michiel Bijlsma & Clemens Kool & Marielle Non, 2018. "The effect of financial development on economic growth: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(57), pages 6128-6148, December.
    14. Bidisha Mukhopadhyay, 2011. "Structural breaks in finance growth nexus: the study of Indonesia," Journal of Economics and Behavioral Studies, AMH International, vol. 1(1), pages 1-6.
    15. James B. Ang, 2008. "A Survey Of Recent Developments In The Literature Of Finance And Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 536-576, July.
    16. Polemis, Michael L. & Stengos, Thanasis & Tzeremes, Nickolaos G., 2020. "Revisiting the impact of financial depth on growth: A semi-parametric approach," Finance Research Letters, Elsevier, vol. 36(C).
    17. Henderson, Daniel J. & Papageorgiou, Chris & Parmeter, Christopher F., 2013. "Who benefits from financial development? New methods, new evidence," European Economic Review, Elsevier, vol. 63(C), pages 47-67.
    18. Philip Arestis & Georgios Chortareas & Georgios Magkonis, 2015. "The Financial Development And Growth Nexus: A Meta-Analysis," Journal of Economic Surveys, Wiley Blackwell, vol. 29(3), pages 549-565, July.
    19. Argyropoulos, Efthymios & Tzavalis, Elias, 2016. "Forecasting economic activity from yield curve factors," The North American Journal of Economics and Finance, Elsevier, vol. 36(C), pages 293-311.
    20. Andini, Monica & Andini, Corrado, 2014. "Finance, growth and quantile parameter heterogeneity," Journal of Macroeconomics, Elsevier, vol. 40(C), pages 308-322.
    21. Sinem Guler Kangalli Uyar & Umut Uyar, 2018. "Quantile Parameter Heterogeneity in the Finance-Growth Relation: The Case of OECD Countries," Prague Economic Papers, Prague University of Economics and Business, vol. 2018(1), pages 92-112.

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    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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