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Banking sector depth and economic growth nexus: a comparative study between the natural resource-based and the rest of the world’s economies

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  • Ali Al-Moulani
  • Constantinos Alexiou

Abstract

This paper investigates the relationship between banking sector depth and long-term economic growth in the natural resource-based economies vis-à-vis economies that are not dependent on natural resources. For the empirical investigation, a Generalised Method of Moments estimator for dynamic panel data models is adopted for 194 countries spanning the period 1964–2013. Using different measures of banking sector depth and economic growth, the investigation yields three key findings. First, the banking–growth relationship is non-linear and positive within certain levels of banking sector depth in both country groups. Second, the time lag between the change in the level of banking sector depth and the effect on economic growth is shorter in the natural resource-based countries than in the other countries. Finally, the total effect of banking sector deepening on long-term economic growth is weaker in economies with abundant natural resources than in the rest of the world.

Suggested Citation

  • Ali Al-Moulani & Constantinos Alexiou, 2017. "Banking sector depth and economic growth nexus: a comparative study between the natural resource-based and the rest of the world’s economies," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 625-650, September.
    • Handle: RePEc:taf:irapec:v:31:y:2017:i:5:p:625-650
    DOI: 10.1080/02692171.2017.1299115
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    1. David Roodman, 2006. "How to Do xtabond2," North American Stata Users' Group Meetings 2006 8, Stata Users Group.
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    Cited by:

    1. Chen Haibo & Emmanuel Kwaku Manu & Mary Somuah, 2023. "Examining Finance-Growth Nexus: Empirical Evidence From the Sub-Regional Economies of Africa," SAGE Open, , vol. 13(1), pages 21582440231, February.
    2. Mittal, Amit & Garg, Ajay Kumar, 2021. "Bank stocks inform higher growth—A System GMM analysis of ten emerging markets in Asia," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 210-220.
    3. Mary Donkor & Yusheng Kong & Emmanuel Kwaku Manu & Albert Henry Ntarmah & Florence Appiah-Twum, 2022. "Economic Growth and Environmental Quality: Analysis of Government Expenditure and the Causal Effect," IJERPH, MDPI, vol. 19(17), pages 1-23, August.
    4. Chau, Ka Yin & Moslehpour, Massoud & Tu, Yu-Te & Tai, Nguyen Tan & Tien, Nguyen Hoang & Huy, Pham Quang, 2022. "Exploring the impact of green energy and consumption on the sustainability of natural resources: Empirical evidence from G7 countries," Renewable Energy, Elsevier, vol. 196(C), pages 1241-1249.

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