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FINANCIAL DEVELOPMENT ON GROWTH CONVERGENCE
Author(s) -
Kim DongHyeon,
Huang HoChuan,
Lin ShuChin,
Yeh ChihChuan
Publication year - 2010
Publication title -
scottish journal of political economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.4
H-Index - 46
eISSN - 1467-9485
pISSN - 0036-9292
DOI - 10.1111/j.1467-9485.2010.00528.x
Subject(s) - economics , convergence (economics) , financial intermediary , stock market , instrumental variable , productivity , intermediation , variable (mathematics) , econometrics , macroeconomics , mathematics , paleontology , mathematical analysis , horse , biology
This paper investigates whether the impacts of financial development on growth convergence vary with the stage of real development. We implement this analysis through the instrumental variable threshold regression approach proposed by Caner and Hansen. Our empirical evidence shows that financial intermediary development leads to long‐run convergence in growth of both economic activity and productivity. Moreover, such convergence‐enhancing effects of financial intermediation are stronger for less‐developed countries than for the more industrialized. In addition, the data reveal that stock market development assists growth convergence only in low‐income countries.