Banking industry volatility and economic growth |
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Authors: | Fariborz Moshirian Qiongbing Wu |
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Institution: | 1. Australian School of Business, The University of New South Wales, Sydney, NSW 2052, Australia;2. School of Business, The University of Western Sydney, Locked Bag 1797, Penrith South DC, NSW 1791, Australia |
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Abstract: | Utilizing the recent dynamic panel GMM estimation techniques for 36 markets, this research investigates the relationship between banking industry volatility and future economic growth, and provides empirical evidence complementary to Cole et al. (2008) who examine the finance-growth nexus from a unique asset pricing theory perspective and document a positive relationship between bank stock returns and future economic growth that is significantly influenced by a series of country-specific and banking institutional characteristics. We find that the negative link between banking industry volatility and future economic growth is significantly affected by government ownership of banks, the enforcement of the insider trading law, systemic banking crises, and bank accounting disclosure standards, while the impact of financial development is ambiguous. The significant results are primarily driven by the data from emerging markets. |
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Keywords: | G14 G15 G21 |
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