This thesis investigates the relationship between economic growth and financial development in developing countries over 1988-2001. Previous studies have generally used averaged data, for both developing and developed countries, and inappropriate estimation methods. In an attempt to reach some definitive conclusions, Generalised Method of Moments dynamic estimation is used with a newly collected panel of annual data to assess the relationship. The results show that while banks performance has a negative impact on growth, stock markets positively promote growth. To reach an overall conclusion about the impact of finance on growth and to solve the problems associated with the existence of multicollinearity among the different measures of financial development, principal components analysis is used to generate new, comprehensive measures of financial development. In assessing the link between the new measures and financial development and growth, the results support the existence of an overall positive relationship. The thesis also examines the behaviour of interest rates in developing and industrialised countries using individual and panel unit root tests. The results are sensitive to the choice of the test, country and time unit.

Stock markets, banks and economic growth

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Likelihood Based Inference In Cointegrated Vector Autoregressive Models

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Strategic planning for information systems

The European Bank for Reconstruction and Development, headquartered in London, England, fosters the transition toward market-oriented economies and promotes private and entrepreneurial initiatives in Central and Eastern Europe and the Commonwealth of Indep

European Bank for Reconstruction and Development (EBRD)

This article re-examines the finance-growth nexus in China using principal components analysis and ARDL bounds testing approach to cointegration. The results suggest that principal components have an effective role in examining the links between growth and financial development and, that financial development fosters economic growth.

Finance-growth nexus in China revisited: New evidence from principal components and ARDL bounds tests

Bond market development and economic growth: The G-20 experience

We examine the relationships between the banking sector development, insurance market development and economic growth of the Eurozone countries between 1980 and 2015. Using the vector error correction model, the study shows that in the long run, banking sector development and insurance market development have a significant impact on economic growth of European countries. In the short term, we find both unidirectional and bidirectional causality between the three. Based on the empirical findings, a focus must be given to banking sector development and insurance market development in order to create sustained economic growth in an increasingly inter-connected world.

Impact of banking sector development on insurance market-growth nexus: the study of Eurozone countries

This study makes an attempt to assess the relationship between venture capital, innovation activities and per capita economic growth in the European Economic Area (EEA) countries between 1989 and 2014. We use three indicators of venture capital and eight activities of innovation to examine this assessment. The study principally highlights whether Granger causality runs between these variables both ways, one way, or not at all. Using a panel vector error correction model (VECM), we find that both venture capital and innovation activities contribute to long-run per capita economic growth. These results provide imperative policy implications for these EEA countries.

Venture capital, innovation activities, and economic growth: are feedback effects at work?

The paper examines the long-run relationship between development of insurance sector and economic growth in G-20 countries for the period 1980-2011. Using Vector Auto-Regressive (VAR) model for testing the Granger causalities, the study finds the presence of both unidirectional and bidirectional causality between development of insurance sector and economic growth. The policy implication of this study is that the economic policies should recognize the differences in the development of insurance sector and economic growth in order to maintain sustainable development in the G-20 countries.Key Words: Development of insurance sector, Economic growth, VAR, Granger causality, G-20(ProQuest: ... denotes formulae omitted.)INTRODUCTIONIn this paper, we analyze the relationship between economic growth and six dimensions of insurance sector, a sub-sector of the financial development. The six dimensions of in suran ce sector include life in surance density, non-life insurance density, total insurance density, life insurance penetration, non-life insurance penetration and total insurance penetration. These are extensively used as proxies of insurance market activities and particularly with reference to the studies of the relationships between development of insurance sector and macroeconomic factors such as gross domestic product, interest rate, inflation, and so on (see, for instance, Ward and Zurbruegg, 2000; Zheng et al., 2009; Chen et al., 2012; Chen et al., 2013; and Guo and Huang, 2013).Usually, financial development refers to aggregate size of the financial sector, its sectorial composition, and a range of attributes of individual sectors that determine their effectiveness in meeting users' requirements. The evaluation of financial structure should cover the roles of the key institutional players, including the central bank, commercial and merchant banks, saving institutions, development financial institutions, insurance companies, mortgage entities, pension funds, the stock market, and other financial market institutions (IMF, 2005; and Zaman et al., 2012). Most of the financial literature provides wide-coverage on financial sector development, particularly with reference to both banks and stock market development, and its link to economic growth. However, the inclusion of insurance sector in growth enhancing process is having low coverage and has received much less attention than the banking and equity markets (see, for instance, Guo and Huang, 2013; and Lee et al., 2013a). Moreover, the inclusion of insurance sector in economic growth are documented in the following literature: Beenstock et al. (1986), Wasow and Hill (1986), Cummins and Outreville (1987), Outreville (1996 and 1990), Enz (2000), Ward and Zurbruegg (2000), Beck and Webb (2003), Harrington and Yu (2003), Hussels et al. (2005), Kugler and Ofoghi (2005), Webb et al. (2005), Arena (2008), Haiss and Sumegi (2008), Vadlamannati (2008), Curak et al. (2009), Avram et al. (2010), Andersson et al. (2010), Ching et al. (2010), Han et al. (2010), Lee et al. (2010), Nektarios (2010), Lee (2011), Liu (2011), Chang and Lee (2012), Chen et al. (2012), Horng et al. (2012), Lee and Chiu (2012), Lee et al. (2012), Teresa and Garcia (2012), Chang et al. (2014), Chen et al. (2013), Dragos and Dragos (2013), Lee (2013), Lee et al. (2013b), Cristea et al., (2014), and Liu and Lee (2014).Insurance market is a late development industry, causing the difficulties on assessing the role of insurance in the development process (Outreville, 1990). This study adds the insurance coverage to the finance literature by addressing two important questions: first, the existence of cointegration between Development of Insurance Sector (DIS) and per capita economic growth (GDP); and second, the presence of long-run and short-run direction of causality between DIS and GDP. The focus is on G-20 countries during the period 1980-2013. Therefore, the insurance services, like other financial services, has fully grown in quantitative importance as an integral part of the general development of the financial sector, with the emphasis more recently pitching to insurance business (Lee et al. …

Development of Insurance Sector and Economic Growth: The G-20 Experience

This paper examines the long-run relationship between venture capital investment and per capita economic growth in the 19 European Economic Area (EEA) countries for the period 1989-2014. We use three different indicators of venture capital (VC) investment, namely VC at early stage investment, VC at later stage investment, and VC total investment. Using cointegration technique, the study warrants the support of long-run relationship between VC investment and per capita economic growth in a few cases, typically with reference to a particular VC indicator and per capita economic growth we use. Using vector auto-regressive (VAR) model for testing the Granger causalities, the study acknowledges mixed evidence of the relationship between the venture capital investment and per capita economic growth in the selected EEA countries, both by individual country and at the panel setting. In some instances, venture capital investment leads to per capita economic growth, lending support to supply-leading hypothesis (SLH) of VC investment-growth nexus. In other instances, it is the per capita economic growth that regulates the level of venture capital investment, lending support to demand-following hypothesis (DFH) of VC investment-growth nexus. There are also circumstances, where venture capital investment and per capita economic growth are mutually interdependent. That is the situation where both are self-reinforcing and offer support to feedback hypothesis (FBH) of VC investment-growth nexus. In addition, there are also instances, where the venture capital investment and per capita economic growth are independent of each other. This is the situation where both are neutral and offer support to neutrality hypothesis (NLH) of VC investment-growth nexus. To summarize, Granger causality results vary from country to country within the EEA countries, depending upon the type of venture capital investment and per capita economic growth that we use in a particular empirical exploration process. The policy implication of this study is that the economic policies should recognize the differences in the venture capital investment and per capita economic growth in order to maintain sustainable development in these EEA countries.

Saurav Dash

Papers

Bond market development and economic growth: The G-20 experience

Impact of banking sector development on insurance market-growth nexus: the study of Eurozone countries

Venture capital, innovation activities, and economic growth: are feedback effects at work?

Development of Insurance Sector and Economic Growth: The G-20 Experience

Nexus between venture capital and economic growth in European economic area countries: The Granger causality approach