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N° 2007-24 |
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| December 2007 |
| Testing the Finance-Growth Link: is There a Difference Between Developed and Developing Countries? |
Gilles Dufrénot
Valérie Mignon
Anne Péguin-Feissolle |
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| We revisit the evidence of the existence of a long-run link between financial intermediation
and economic growth, by testing of cointegration between the growth rate of real GDP,
control variables and three series reflecting financial intermediation. We consider a model
with a factor structure that allows us to determine whether the finance-growth link is due to
cross countries dependence and/or whether it characterises countries with strong
heterogeneities. We employ techniques recently proposed in the panel data literature, such
as PANIC analysis and cointegration in common factor models. Our results show
differences between the developed and developing countries. We run a comparative
regression analysis on the 1980-2006 period and find that financial intermediation is a
positive determinant of growth in developed countries, while it acts negatively on the
economic growth of developing countries. |
Non-technical summary  |
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Résumé
non-technique
en français |
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| Full text |
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| Financial intermediation; growth; common factor; panel data; PANIC
analysis |
Keywords |
| C5; G2; O5 |
JEL classification |
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