Reassessing the relationship between the financial sector and economic growth: Dynamic panel evidence

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dc.contributor.authorAlexiou, Constantinos
dc.contributor.authorVogiazas, Sofoklis
dc.contributor.authorNellis, Joseph G.
dc.date.accessioned2018-01-30T15:17:11Z
dc.date.available2018-01-30T15:17:11Z
dc.date.issued2018-01-25
dc.description.abstractHistorically, the development of the financial sector has been an indispensable driver of economic growth. In the aftermath of the Great Recession, there is a pressing need to reassess the role of the financial sector in the determination of economic growth. Using a dynamic panel framework, our analysis covers 34 European and Commonwealth of Independent States economies for the period 1998–2014 and controls for the role of macroeconomic and institutional variables. Our evidence suggests that the potential benefits of the financial sector finance may have dramatically reversed in recent years, resulting in “un-creative destruction.” The results suggest, tentatively, that there has been a severance of the link between the financial sector and the real economy. The results, however, vary according to the level of economic development across the European and Commonwealth of Independent States economies. In the case of developing market economies, the financial intermediation proxies are not significant in explaining economic growth. The effect of changes in investment expenditure, the money supply, wages, unit labour costs, and trade openness is found to be strong and in line with a priori expectations across all country samples. Notably, government consumption is also found to be a significant driver of economic growth, except in the developing market economies in the period following the Great Recession. In line with the growing consensus in other research areas, we provide evidence of a robust role for the institutional framework proxied by the quality of governance in determining economic development.en_UK
dc.identifier.citationAlexiou C, Vogiazas S, Nellis JG. Reassessing the relationship between the financial sector and economic growth: Dynamic panel evidence. International Journal of Finance & Economics, Volume 23, Issue 2, April 2018, pp. 155-173en_UK
dc.identifier.issn1076-9307
dc.identifier.urihttp://dx.doi.org/10.1002/ijfe.1609
dc.identifier.urihttp://dspace.lib.cranfield.ac.uk/handle/1826/12940
dc.language.isoenen_UK
dc.publisherWileyen_UK
dc.rightsAttribution-NonCommercial 4.0 International*
dc.rightsCreative Commons Attribution-Non-Commercial 4.0 (CC BY-NC 4.0) You are free to: Share — copy and redistribute the material in any medium or format, Adapt — remix, transform, and build upon the material. The licensor cannot revoke these freedoms as long as you follow the license terms. Under the following terms: Attribution — You must give appropriate credit, provide a link to the license, and indicate if changes were made. You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use. Information: Non-Commercial — You may not use the material for commercial purposes. No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.
dc.rights.urihttp://creativecommons.org/licenses/by-nc/4.0/*
dc.subjectCISen_UK
dc.subjectEconomic growthen_UK
dc.subjectEuropean economiesen_UK
dc.subjectFinancial sectoren_UK
dc.titleReassessing the relationship between the financial sector and economic growth: Dynamic panel evidenceen_UK
dc.typeArticleen_UK

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