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An exogeneity analysis of financial deepening and economic growth: evidence from Hong Kong, South Korea and Taiwan

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  • Andy Kwan
  • Yangru Wu
  • Junxi Zhang

Abstract

This paper presents exogeneity tests for the existence (or absence) of a behavioural relationship between financial deepening and economic growth for three high performing economies: Hong Kong, South Korea and Taiwan. The findings suggest that weak, strong and super exogeneity assumptions are valid, and the variable of financial deepening has a positive influence on output growth. Since the successful stories of these high performing economies have been examples for other developing countries, we argue that a sound financial system is essential in the course of economic development.

Suggested Citation

  • Andy Kwan & Yangru Wu & Junxi Zhang, 1998. "An exogeneity analysis of financial deepening and economic growth: evidence from Hong Kong, South Korea and Taiwan," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 7(3), pages 339-354.
    • Handle: RePEc:taf:jitecd:v:7:y:1998:i:3:p:339-354
    DOI: 10.1080/09638199800000018
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    References listed on IDEAS

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    1. De Gregorio, Jose & Guidotti, Pablo E., 1995. "Financial development and economic growth," World Development, Elsevier, vol. 23(3), pages 433-448, March.
    2. Berrie, Tom, 1987. "World development report 1987 : The World Bank English edition published by Oxford University Press, New York, 1987, 288 pp, US$26.00," Energy Policy, Elsevier, vol. 15(6), pages 588-589, December.
    3. Krueger, Anne O., 1990. "Perspectives on Trade and Development," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226454900, April.
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    Cited by:

    1. Muhammad Arshad Khan & Abdul Qayyum, 2007. "Trade Liberalisation, Financial Development and Economic Growth," Trade Working Papers 22204, East Asian Bureau of Economic Research.
    2. Kar Muhsin & Peker Osman & Kaplan Muhittin, 2008. "Trade Liberalization, Financial Development and Economic Growth in The Long Term: The Case of Turkey," South East European Journal of Economics and Business, Sciendo, vol. 3(2), pages 25-38, November.
    3. Sinha, Dipendra & Macri, Joseph, 2001. "Financial development and economic growth: The case of eight Asian countries," MPRA Paper 18297, University Library of Munich, Germany.

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