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The Relationship Between Financial Development And Economic Growth In Latin American Countries: The Role Of Banking Crises And Financial Liberalization

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  • ALEJANDRO SANTANA

    (Department of Society, Politics and Sustainability, ESADE Business School, Ramon Llull University, Av. Torre Blanca, 59, C.P. 08172, Sant Cugat, Spain)

Abstract

This paper examines the effects of banking crises and financial liberalization on the relationship between financial development and economic growth in a panel of 16 Latin American countries over the period 1973-2005. Applying the dynamic panel method that incorporates Generalized Method of Moments system, the main findings show that financial liberalization did not result in a positive relationship between financial development and economic growth due to the emergence and recurrence of banking crises. Our findings also confirm those of theoretical approaches that suggest financial liberalization can generate banking crises, while bringing into question approaches that support a positive relationship between financial development and economic growth.

Suggested Citation

  • Alejandro Santana, 2020. "The Relationship Between Financial Development And Economic Growth In Latin American Countries: The Role Of Banking Crises And Financial Liberalization," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 20(04), pages 1-26, December.
    • Handle: RePEc:wsi:gejxxx:v:20:y:2020:i:04:n:s2194565920500232
    DOI: 10.1142/S2194565920500232
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    Cited by:

    1. S. M. Shamsul Alam & Mohammad Abdul Matin Chowdhury & Dzuljastri Bin Abdul Razak, 2021. "Research evolution in banking performance: a bibliometric analysis," Future Business Journal, Springer, vol. 7(1), pages 1-19, December.
    2. Ummuhabeeba Chaliyan & Mini P. Thomas, 2021. "Financial Markets, Financial Institutions and International Trade: Examining the causal links for Indian Economy," Papers 2112.01749, arXiv.org, revised Jun 2022.

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