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The hype of social capital in the finance‐growth nexus
Author(s) -
Raheem Ibrahim D.,
Ajide Kazeem B.,
Vo Xuan V.
Publication year - 2021
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/ecno.12192
Subject(s) - nexus (standard) , trilogy , economics , capital (architecture) , finance , social capital , monetary economics , political science , computer science , history , embedded system , art , literature , archaeology , law
The trilogy among economic growth, social capital (SC), and financial development is examined based on three hypotheses: first, SC is important in the finance‐growth nexus. Second, there is a threshold effect of SC in the finance‐growth nexus. Third, the SC‐finance‐growth trilogy depends on the countries' income level. Building data set for 70 countries, some interesting results were obtained: (i) the marginal effects of both SC and finance promote economic growth at higher levels; (ii) there is evidence of a threshold effect of SC, as finance enhances more growth when SC is below the threshold level; (iii) higher‐income countries tend not to benefit from the SC‐finance‐growth trilogy. These results suggest that the influence of SC on growth trajectory is exaggerated in the literature. The study recommends that policymakers should pursue other sources of economic growth aside SC, while ensuring that the level of SC does not deteriorate.