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Linking Financial Development and Total Factor Productivity of the Philippines

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  • Calub, Renz Adrian

Abstract

Financial development is said to have an impact on growth. In this paper we try to extend this notion to total factor productivity. As Bianchi [2010] noted, easing access to capital may encourage entrepreneurship and thus productivity. To test this relationship, we use Cororaton and Cuenca’s [2001] estimates of TFP and World Bank’s M3 to GDP (liquid liabilities to GDP) as a measure of financial depth. Estimates from our vector error correction model suggest that there is indeed a dynamic relationship between financial development and TFP.

Suggested Citation

  • Calub, Renz Adrian, 2011. "Linking Financial Development and Total Factor Productivity of the Philippines," MPRA Paper 66042, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:66042
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    References listed on IDEAS

    as
    1. Milo Bianchi, 2010. "Credit constraints, entrepreneurial talent, and economic development," Small Business Economics, Springer, vol. 34(1), pages 93-104, January.
    2. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 108(3), pages 717-737.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 39(3), pages 106-135.
    4. F. Arizala & E. Cavallo & A. Galindo, 2013. "Financial development and TFP growth: cross-country and industry-level evidence," Applied Financial Economics, Taylor & Francis Journals, vol. 23(6), pages 433-448, March.
    5. Francisco Arizala & Eduardo Cavallo & Arturo Galindo, 2009. "Financial Development and TFP Growth: Cross-Country and Industry-Level Evidence," Research Department Publications 4630, Inter-American Development Bank, Research Department.
    6. Laura Alfaro & Sebnem Kalemli‐Ozcan & Selin Sayek, 2009. "FDI, Productivity and Financial Development," The World Economy, Wiley Blackwell, vol. 32(1), pages 111-135, January.
    7. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
    8. Cororaton, Caesar B. & Cuenca, Janet S., 2001. "Estimates of Total Factor Productivity in the Philippines," Discussion Papers DP 2001-02, Philippine Institute for Development Studies.
    9. repec:dau:papers:123456789/5381 is not listed on IDEAS
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    More about this item

    Keywords

    Financial development; total factor productivity; VECM;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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