Financial development, real sector, and economic growth

Article

Ductor, L. and Grechyna, D. 2015. Financial development, real sector, and economic growth. International Review of Economics and Finance. 37, pp. 393-405. https://doi.org/10.1016/j.iref.2015.01.001
TypeArticle
TitleFinancial development, real sector, and economic growth
AuthorsDuctor, L. and Grechyna, D.
Abstract

This paper evaluates the interdependence between financial development and real sector output and the effect on economic growth. Using panel data for 101 developed and developing countries over the period 1970 to 2010, we show that the effect of financial development on economic growth depends on the growth of private credit relative to the real output growth. The findings also suggest that the effect of financial development on growth becomes negative, if there is rapid growth in private credit not accompanied by growth in real output. Our findings provide empirical evidence that supports the theories that postulate the existence of an optimal level of financial development given by the characteristics of an economy.

PublisherElsevier
JournalInternational Review of Economics and Finance
ISSN1059-0560
Publication dates
Online13 Jan 2015
PrintMay 2015
Publication process dates
Deposited27 Mar 2015
Accepted06 Jan 2015
Output statusPublished
Accepted author manuscript
License
Additional information

Available online 13 January 2015

Digital Object Identifier (DOI)https://doi.org/10.1016/j.iref.2015.01.001
LanguageEnglish
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