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Finance and Growth : Empirical Evidence from Developing Countries, 1960-1990

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  • TRABELSI, Mohammed

Abstract

This paper examines the empirical relationship between financial intermediation and economic growth using cross-country and panel data regressions for 69 developing countries for the 1960-1990 period. The main results are : (i) financial development is a significant determinant of economic growth, as it has been shown in cross-sectional regressions; (ii) financial markets cease to exert any effect on real activity when the temporal dimension is introduced in the regressions. The paradox may be explained, in the case of developing countries, by the lack of an entrepreneurial private sector capable to transform the available funds into profitable projects; (iii) the effect of financial development on economic growth is channeled mainly through an increase in investment efficiency.

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  • TRABELSI, Mohammed, 2002. "Finance and Growth : Empirical Evidence from Developing Countries, 1960-1990," Cahiers de recherche 2002-13, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:2002-13
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    File URL: http://hdl.handle.net/1866/381
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    2. Marques, Luís Miguel & Fuinhas, José Alberto & Marques, António Cardoso, 2012. "Interação entre o mercado acionista e o crescimento económico: Uma apreciação do caso português (1993-2010) [Interaction between the stock market and economic growth: An assessment of the Portugues," MPRA Paper 39808, University Library of Munich, Germany.
    3. Igue, Charlemagne Babatoundé, 2013. "Intermédiation financière et croissance économique : une approche basée sur le concept d’efficacité-X appliquée à la zone UEMOA," L'Actualité Economique, Société Canadienne de Science Economique, vol. 89(1), pages 7-37, Mars.
    4. Smaoui, Houcem & Nechi, Salem, 2017. "Does sukuk market development spur economic growth?," Research in International Business and Finance, Elsevier, vol. 41(C), pages 136-147.
    5. F Z Alaoui Moustain, 2004. "Market distortions and the informal economy: the case of Morocco," Working Papers 542774, Lancaster University Management School, Economics Department.
    6. Roger Tsafack Nanfosso & Christian Lambert Nguena, 2015. "Importance des Politiques Financières dans la Croissance Economique en zone CEMAC: Approche en Données de Panel," African Development Review, African Development Bank, vol. 27(1), pages 52-66, March.
    7. Comlanvi Jude EGGOH, 2009. "Développement financier, instabilité financière et croissance économique : un réexamen de la relation," LEO Working Papers / DR LEO 444, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    8. Ake Boubakari & Dehuan Jin, 2010. "The Role of Stock Market Development in Economic Growth: Evidence from Some Euronext Countries," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 1(1), pages 14-20, December.

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    financial intermediation; economic growth; cross-section; nel data;
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