IDEAS home Printed from https://ideas.repec.org/a/wsi/rpbfmp/v11y2008i04ns0219091508001441.html
   My bibliography  Save this article

Exploring the Root-Leaf Relationship between the Manufacturing and Financial Services Industry in Taiwan

Author

Listed:
  • Chin-Chen Chien

    (Graduate Institute of Finance, National Cheng Kung University, No. 1, University Road, Tainan City 701, Taiwan)

  • Cheng-Few Lee

    (Department of Finance, Rutgers University, 94 Rockafeller Road, Piscataway, NJ 08854, USA)

  • Ya-Yun Cheng

    (Department of International Business Management, Hsiuping Institute of Technology, No. 11, Gongye Rd., Dali City, Taichung County 412-80, Taiwan)

Abstract

We employ the concept of Granger causality to investigate the root-leaf relationship between the manufacturing and financial services industry in Taiwan's economy. Our empirical results show that manufacturing led finance for the last half century, which is consistent with the pattern of other emerging economies. However, the liberalization of the financial services industry in the 1980s changed the relationship from "manufacturing leads, finance follows" to a feedback system. Accordingly, the financial services industry should play a more important role than previously for Taiwan to maintain its economic growth.

Suggested Citation

  • Chin-Chen Chien & Cheng-Few Lee & Ya-Yun Cheng, 2008. "Exploring the Root-Leaf Relationship between the Manufacturing and Financial Services Industry in Taiwan," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 11(04), pages 493-509.
    • Handle: RePEc:wsi:rpbfmp:v:11:y:2008:i:04:n:s0219091508001441
    DOI: 10.1142/S0219091508001441
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S0219091508001441
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1142/S0219091508001441?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. De Ãvila, Diego Romero, 2003. "Finance and growth in the EU: new evidence from the liberalisation and harmonisation of the banking industry," Working Paper Series 266, European Central Bank.
    2. Carl Gaigné & Jacques-François Thisse, 2013. "New Economic Geography and the City," Working Papers SMART 13-02, INRAE UMR SMART.
    3. Liu, Jiangtao & Zhang, Yi & Kuang, Jia, 2023. "Fintech development and green innovation: Evidence from China," Energy Policy, Elsevier, vol. 183(C).
    4. Lin, Jenny X. & Lincoln, William F., 2017. "Pirate's treasure," Journal of International Economics, Elsevier, vol. 109(C), pages 235-245.
    5. Nagmi Moftah Aimer, 2020. "Renewable energy consumption, financial development and economic growth: Evidence from panel data for the Middle East and North African countries," Economics Bulletin, AccessEcon, vol. 40(3), pages 2058-2072.
    6. Bernhard O. Ishioro, 2013. "Stock Market Development And Economic Growth: Evidence From Zimbabwe," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 22(2), pages 343-360, december.
    7. Roy Stein, 2016. "Review of the Reference Rate in Israel: Telbor and Makam Markets," Bank of Israel Working Papers 2016.12, Bank of Israel.
    8. Keith Hart, 2005. "Formal Bureaucracy and the Emergent Forms of the Informal Economy," WIDER Working Paper Series RP2005-11, World Institute for Development Economic Research (UNU-WIDER).
    9. Mikael Priks, 2005. "Optimal Rent Extraction in Pre-Industrial England and France – Default Risk and Monitoring Costs," CESifo Working Paper Series 1464, CESifo.
    10. Gennady Bilych, 2011. "Profit, Inflation and Economic Growth," Macroeconomics bilych_gennady.85552-1, Socionet.
    11. C. A. E. Goodhart, 2009. "The Continuing Muddles of Monetary Theory: A Steadfast Refusal to Face Facts," Economica, London School of Economics and Political Science, vol. 76(s1), pages 821-830, October.
    12. William F. Lincoln & Andrew H. McCallum & Michael Siemer, 2017. "The Great Recession and a Missing Generation of Exporters," Finance and Economics Discussion Series 2017-108, Board of Governors of the Federal Reserve System (U.S.).
    13. Ang, James B., 2008. "What are the mechanisms linking financial development and economic growth in Malaysia," Economic Modelling, Elsevier, vol. 25(1), pages 38-53, January.
    14. Bengtsson, Ingemar, 2005. "Transaction Costs, Money and Units of Account," Working Papers 2005:29, Lund University, Department of Economics.
    15. Echavarría Juan José & María Angélica Arbeláez & María Fernanda Rosales, 2006. "La productividad y sus determinantes:el caso de la industria colombiana," Revista Desarrollo y Sociedad, Universidad de los Andes,Facultad de Economía, CEDE, June.
    16. Perera, N. & Paudel, R.C., 2009. "Financial Development and Economic Growth in Sri Lanka," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 9(1).
    17. Edgardo Barandiarán, 1989. "Una Teoría sobre el Monopolio Estatal del Dinero," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 26(77), pages 11-24.
    18. Cimoli, Mario & Correa, Nelson & Katz, Jorge & Studart, Rogério, 2003. "Institutional requirements for market-led development in Latin America," Series Históricas 7792, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    19. Pasquale Lucio Scandizzo, 2004. "Financing Technology: An Assessment of Theory and Practice," CEIS Research Paper 43, Tor Vergata University, CEIS.
    20. Ross Levine & Norman Loayza & Thorsten Beck, 2002. "Financial Intermediation and Growth: Causality and Causes," Central Banking, Analysis, and Economic Policies Book Series, in: Leonardo Hernández & Klaus Schmidt-Hebbel & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Se (ed.),Banking, Financial Integration, and International Crises, edition 1, volume 3, chapter 2, pages 031-084, Central Bank of Chile.

    More about this item

    Keywords

    Error correction model (ECM); Granger causality; economic growth;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wsi:rpbfmp:v:11:y:2008:i:04:n:s0219091508001441. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.