TY - UNPB

T1 - Financial Development, Economic Performance and Democracy

T2 - Methodological Issues and New Estimates

AU - Li, Zhenxiong

AU - Ingham, Hilary

PY - 2020/3/9

Y1 - 2020/3/9

N2 - This paper investigates the long-term effect of financial development on economic growth using annual data for 67 countries over the period 1971 to 2007.Both autoregressive distributed lag (ARDL) and cross-sectionally augmented autoregressive distributed lag (CS-ARDL) models are applied to count for crosscountry heterogeneity and error cross-country dependence. The results uphold a positive and significant effect of financial development on long-run per capita output. There is also some evidence of a non-linear relationship between financial development and growth. However, the analysis also reveals that the resultsderive primarily from non-democratic countries.

AB - This paper investigates the long-term effect of financial development on economic growth using annual data for 67 countries over the period 1971 to 2007.Both autoregressive distributed lag (ARDL) and cross-sectionally augmented autoregressive distributed lag (CS-ARDL) models are applied to count for crosscountry heterogeneity and error cross-country dependence. The results uphold a positive and significant effect of financial development on long-run per capita output. There is also some evidence of a non-linear relationship between financial development and growth. However, the analysis also reveals that the resultsderive primarily from non-democratic countries.

KW - Economic growth

KW - Financial development

KW - Democracy

M3 - Working paper

T3 - Economics Working Papers Series

BT - Financial Development, Economic Performance and Democracy

PB - Lancaster University, Department of Economics

CY - Lancaster

ER -