Financial Development, Financial Fragility, and Growth
The authors study the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private domestic credit and liquid liabilities (for example, Levine, Loayza, and Beck 2000). On the other hand, the banking and currency crisis literature finds that monetary aggregates, such as domestic credit, are among the best predictors of crises and their related economic downturns (for example, Kaminski and Reinhart 1999). The authors account for these contrasting effects based on the distinction between the short- and long-run impacts of financial intermediation. Working with a panel of cross-country and time-series observations, they estimate an encompassing model of short- and long-run effects using the Pooled Mean Group estimator developed by Pesaran, Shin, and Smith (1999). Their conclusion from this analysis is that a positive long-run relationship between financial intermediation and output growth coexists with a mostly negative short-run relationship. The authors further develop an explanation for these contrasting effects by relating them to recent theoretical models, by linking the estimated short-run effects to measures of financial fragility (namely, banking crises and financial volatility), and by jointly analyzing the effects of financial depth and fragility in classic panel growth regressions.
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dig-okr-10986142332024-08-08T17:29:27Z Financial Development, Financial Fragility, and Growth Loayza, Norman Rancière, Romain ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY The authors study the apparent contradiction between two strands of the literature on the effects of financial intermediation on economic activity. On the one hand, the empirical growth literature finds a positive effect of financial depth as measured by, for instance, private domestic credit and liquid liabilities (for example, Levine, Loayza, and Beck 2000). On the other hand, the banking and currency crisis literature finds that monetary aggregates, such as domestic credit, are among the best predictors of crises and their related economic downturns (for example, Kaminski and Reinhart 1999). The authors account for these contrasting effects based on the distinction between the short- and long-run impacts of financial intermediation. Working with a panel of cross-country and time-series observations, they estimate an encompassing model of short- and long-run effects using the Pooled Mean Group estimator developed by Pesaran, Shin, and Smith (1999). Their conclusion from this analysis is that a positive long-run relationship between financial intermediation and output growth coexists with a mostly negative short-run relationship. The authors further develop an explanation for these contrasting effects by relating them to recent theoretical models, by linking the estimated short-run effects to measures of financial fragility (namely, banking crises and financial volatility), and by jointly analyzing the effects of financial depth and fragility in classic panel growth regressions. 2013-06-27T16:14:19Z 2013-06-27T16:14:19Z 2004-10 http://documents.worldbank.org/curated/en/2004/10/5278725/financial-development-financial-fragility-growth https://hdl.handle.net/10986/14233 English en_US Policy Research Working Paper;No.3431 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, D.C. |
institution |
Banco Mundial |
collection |
DSpace |
country |
Estados Unidos |
countrycode |
US |
component |
Bibliográfico |
access |
En linea |
databasecode |
dig-okr |
tag |
biblioteca |
region |
America del Norte |
libraryname |
Biblioteca del Banco Mundial |
language |
English en_US |
topic |
ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY |
spellingShingle |
ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY Loayza, Norman Rancière, Romain Financial Development, Financial Fragility, and Growth |
description |
The authors study the apparent
contradiction between two strands of the literature on the
effects of financial intermediation on economic activity. On
the one hand, the empirical growth literature finds a
positive effect of financial depth as measured by, for
instance, private domestic credit and liquid liabilities
(for example, Levine, Loayza, and Beck 2000). On the other
hand, the banking and currency crisis literature finds that
monetary aggregates, such as domestic credit, are among the
best predictors of crises and their related economic
downturns (for example, Kaminski and Reinhart 1999). The
authors account for these contrasting effects based on the
distinction between the short- and long-run impacts of
financial intermediation. Working with a panel of
cross-country and time-series observations, they estimate an
encompassing model of short- and long-run effects using the
Pooled Mean Group estimator developed by Pesaran, Shin, and
Smith (1999). Their conclusion from this analysis is that a
positive long-run relationship between financial
intermediation and output growth coexists with a mostly
negative short-run relationship. The authors further develop
an explanation for these contrasting effects by relating
them to recent theoretical models, by linking the estimated
short-run effects to measures of financial fragility
(namely, banking crises and financial volatility), and by
jointly analyzing the effects of financial depth and
fragility in classic panel growth regressions. |
topic_facet |
ACCOUNTS ADVERSE SELECTION ANNUAL OBSERVATIONS ASSET LIQUIDATION BANK OF ENGLAND BANK RUNS BANKING CRISES BANKING CRISIS BANKING SUPERVISION BANKS BOOMS CAPITAL MARKETS CENTRAL BANK CREDIT POLICY CROSS-COUNTRY EXPERIENCE CURRENCY DIVERSIFICATION DOMESTIC CREDIT ECONOMETRICS ECONOMIC ACTIVITY ECONOMIC GROWTH ECONOMIC STATISTICS ECONOMICS EMPLOYMENT EQUILIBRIUM FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DEEPENING FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL ECONOMICS FINANCIAL FRAGILITY FINANCIAL INTERMEDIATION FINANCIAL LIBERALIZATION FINANCIAL MARKETS FINANCIAL VOLATILITY INCOME INFLATION INSURANCE INTEREST RATES INTERNATIONAL TRADE INVESTMENT PROJECTS LATIN AMERICAN LENDING RATES LIQUIDITY MATURITY METHODOLOGY MONETARY AGGREGATES OUTPUT PORTFOLIOS PRODUCTIVITY PRODUCTIVITY GROWTH SAVINGS SYSTEMIC BANKING CRISES THEORETICAL MODELS VULNERABILITY |
author |
Loayza, Norman Rancière, Romain |
author_facet |
Loayza, Norman Rancière, Romain |
author_sort |
Loayza, Norman |
title |
Financial Development, Financial Fragility, and Growth |
title_short |
Financial Development, Financial Fragility, and Growth |
title_full |
Financial Development, Financial Fragility, and Growth |
title_fullStr |
Financial Development, Financial Fragility, and Growth |
title_full_unstemmed |
Financial Development, Financial Fragility, and Growth |
title_sort |
financial development, financial fragility, and growth |
publisher |
World Bank, Washington, D.C. |
publishDate |
2004-10 |
url |
http://documents.worldbank.org/curated/en/2004/10/5278725/financial-development-financial-fragility-growth https://hdl.handle.net/10986/14233 |
work_keys_str_mv |
AT loayzanorman financialdevelopmentfinancialfragilityandgrowth AT ranciereromain financialdevelopmentfinancialfragilityandgrowth |
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1807159812709941248 |