Interrelationships among banks, stock markets and economic growth: an empirical investigation

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Title:	Interrelationships among banks, stock markets and economic growth: an empirical investigation
Authors:	Kim, Dong-Hyeon;Lin, Shu-Chin
Keywords:	economic growth;financial development;identification through heteroscedasticity;C33;G21;O16
Date:	2013-05-16
Issue Date:	2016-01-06 10:55:28 (UTC+8)
Abstract:	This article utilizes a simultaneous equations model to study the relationships among economic growth, banking and stock market development. In contrast to conventional instrumental variable approach, we implement the analysis via the methodology of identification through heteroscedasticity. Using Beck and Levine (2004) dataset, we find that each of the three variables interacts in important ways. While both are conducive to economic growth, banking development matters more for growth in low-income countries and stock market development is more favourable to growth in high-income or low-inflation ones. The data also reveal coexistence of a positive effect of banking development on stock market development and a negative effect of stock market development on banking development. Besides, the feedback effects of growth on both banking and stock market development are found.
Relation:	Applied Economics 45(31), pp.4385-4394
DOI:	10.1080/00036846.2013.786165
Appears in Collections:	[Graduate Institute & Department of Economics] Journal Article

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