Open Access“FINANCE AND GROWTH” RE-VISITED
Author(s) -
Lizethe Berenice Méndez-Heras,
Steven Ongena
Publication year - 2020
Publication title -
journal of financial management markets and institutions
Language(s) - English
Resource type - Journals
ISSN - 2282-717X
DOI - 10.1142/s2282717x20500012
Subject(s) - nexus (standard) , economics , finance , financial system , computer science , embedded system
We test whether the relationship between finance and growth is present in 48 countries over 20 different periods of an equal length of 15 years, starting in 1980 (to 1995) and ending in 1999 (to 2014). We estimate growth regressions using an IV approach and we find that (1) overall financial development had a positive effect on economic growth for almost all our studied periods, (2) the legal system is the primary determinant of the effectiveness of the overall financial system, and (3) financial services were relevant for economic growth even during the financial crisis of 2008. This research is part of a research agenda revisiting the finance–growth nexus using up-to-date empirical methodologies.