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Title: Is the relationship between financial development and economic growth monotonic? evidence from a sample of middle income countries
Authors: Samargandi, N
Fidrmuc, J
Ghosh, S
Keywords: Financial development;Economic growth;Pooled mean group estimation;Dynamic panel threshold;Non-monotonicity
Issue Date: 2015
Publisher: Elsevier
Citation: World Development, 68: 66 - 81, (April 2015)
Abstract: We revisit the relationship between financial development and economic growth in a panel of 52 middle-income countries over the 1980-2008 period. Using pooled mean group estimations in a dynamic heterogeneous panel setting, we show that there is an inverted U-shaped relationship between finance and growth in the long-run. In the short run, the relationship is insignificant. This suggests that too much finance can exert a negative influence on growth in middle-income countries. The finding of a non-monotonic effect of financial development on growth is confirmed by estimating a threshold model.
ISSN: 0305-750X
Appears in Collections:Dept of Economics and Finance Research Papers

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