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Fertility and banking development: New panel evidence

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  • Dong‐Hyeon Kim
  • Ting‐Cih Chen
  • Shu‐Chin Lin

Abstract

Fertility plays a crucial role in the process of economic development. Understanding its determinants is pivotal. While most studies emphasize real factors such as industrialization and education, they usually, with a few exceptions, overlook the financial sector channel of impact. To close the gap, the paper investigates the effect of banking development on fertility. Using panel time‐series techniques to a panel of developed and developing countries, it finds that fertility rises with banking development but decreases with banking volatility. It also finds asymmetric responses of fertility to changes in banking development. Households tend to have more children when the banking sector is expanding but do not have less children when the banking sector is declining. The evidence holds for both bank credit to households and to firms. In addition, as additional sources of funds and investment opportunities, development in securities markets is found to raise fertility. Asymmetry is also detected with a larger fertility effect during market booms than busts.

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  • Dong‐Hyeon Kim & Ting‐Cih Chen & Shu‐Chin Lin, 2023. "Fertility and banking development: New panel evidence," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(4), pages 4220-4235, October.
    • Handle: RePEc:wly:ijfiec:v:28:y:2023:i:4:p:4220-4235
    DOI: 10.1002/ijfe.2643
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