A re-examination of financial development,stock markets development and economic growth |
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Authors: | Jung-Suk Yu Benito Sanchez |
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Institution: | 1. School of Urban Planning &2. Real Estate Studies, Dankook University , Gyeonggi-do, 448-701, Korea;3. Department of Economics and Finance , Kean University , Union, NJ 07083, USA |
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Abstract: | This study provides new evidence on the role of financial development and stock market development in accounting for economic growth across geographic regions and income groups. To derive feasible policy implications, we estimate not only unbalanced panel regressions with period fixed effects, but also variance decompositions of annual Gross Domestic Product (GDP) growth rates to examine what proxy measures are most important in economic growth over time and how much they contribute to economic growth. We find distinct direction, timing and strength of the causal links between financial development, stock market development and economic growth based on the results of Granger causality tests. Therefore, it may be necessary to make different efforts to achieve steady economic growth across geographic regions and income groups. |
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Keywords: | financial development stock market development economic growth panel regression Granger causality tests |
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