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Economic Growth and Financial Depth: Is the Relationship Extinct Already?

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  • Paul Wachtel
  • Peter L. Rousseau

Abstract

Although the finance–growth nexus has become firmly entrenched in the empirical literature, studies that question the strength of the empirical results have appeared and seem to have become more frequent as well. A re-examination of the core cross- country panel results that established the relationship between financial depth and growth rates are done. The sensitivity of the core result to changes in time period and variation in the sample of countries included are also examined.

Suggested Citation

  • Paul Wachtel & Peter L. Rousseau, 2010. "Economic Growth and Financial Depth: Is the Relationship Extinct Already?," Working Papers id:3225, eSocialSciences.
    • Handle: RePEc:ess:wpaper:id:3225
    Note: Institutional Papers
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    References listed on IDEAS

    as
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    6. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    7. 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.
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    More about this item

    Keywords

    finance–growth nexus; rolling regression; robustness; cross-country growth;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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