Banking Sector Openness and Economic Growth

Banking sector openness may directly affect growth by improving the access to financial services and indirectly by improving the efficiency of financial intermediaries, both of which reduce the cost of financing, and in turn, stimulate capital accumulation and economic growth. The objective of the paper is to empirically reinvestigate these direct and indirect links using a more advanced econometric technique (GMM dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results confirm the presence of direct and indirect links, and thus provide support for countries planning to open their banking sector for international competition.

Bibliographic Details

Main Authors:	Bayraktar, Nihal, Wang, Yan
Format:	Policy Research Working Paper biblioteca
Language:	English en_US
Published:	World Bank, Washington, DC 2006-10
Subjects:	ACCOUNTING, ACTUAL COST, ALLOCATIVE EFFICIENCY, AUDITING, BANK ASSETS, BANK OF KOREA, BANKING SECTOR, BANKING SERVICES, BORROWING, CAPACITY BUILDING, CAPITAL ACCUMULATION, CAPITAL FLIGHT, CAPITAL INVESTMENT, CAPITAL MOBILITY, COMPETITIVENESS, CONSTANT RETURNS TO SCALE, CONSUMERS, COST OF CAPITAL, COUNTRY LEVEL, DEBT, DEPENDENT VARIABLE, DESCRIPTIVE STATISTICS, DEVELOPED COUNTRIES, DEVELOPING COUNTRIES, DEVELOPMENT ECONOMICS, DOMESTIC CREDIT, DYNAMIC PANEL, EARNING ASSETS, ECONOMETRICS, ECONOMIC GROWTH, ECONOMIC LITERATURE, ECONOMIC STATISTICS, ECONOMIC STUDIES, EMPIRICAL ANALYSIS, EMPIRICAL EVIDENCE, EMPIRICAL MODEL, EMPIRICAL RESULTS, EMPIRICAL SECTION, EMPIRICAL STUDIES, EMPLOYMENT, EMPLOYMENT EQUATIONS, ENTREPRENEURSHIP, EQUATIONS, ERROR TERM, ERROR TERMS, ESTIMATED COEFFICIENTS, ESTIMATION METHOD, ESTIMATION RESULTS, EXPECTED RETURNS, EXPECTED VALUE, EXPLANATORY VARIABLES, FINANCIAL DEPTH, FINANCIAL DEVELOPMENT, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL INTERMEDIARIES, FINANCIAL INTERMEDIARY DEVELOPMENT, FINANCIAL INTERMEDIATION, FINANCIAL LIBERALIZATION, FINANCIAL MARKETS, FINANCIAL REGULATION, FINANCIAL SECTOR, FINANCIAL SERVICES, FOREIGN BANKS, FOREIGN ENTRY, FUNCTIONAL FORM, GDP, GDP PER CAPITA, GLOBALIZATION, GROWTH IMPACT, GROWTH LITERATURE, GROWTH MODEL, GROWTH MODELS, GROWTH RATE, GROWTH REGRESSIONS, HIGH INFLATION, HUMAN CAPITAL, IMPROVING PRODUCTIVITY, INDEPENDENT VARIABLES, INFLATION, INFLATION RATE, INTEREST INCOME, INTEREST RATE, INTEREST RATES, INTERNATIONAL COMPETITION, INVESTMENT RATE, LAGGED LEVELS, LAWS, LIBERALIZATION OF FINANCIAL MARKETS, LIQUIDITY, LONG-RUN GROWTH, LOW INTEREST RATES, LOWERING BARRIERS, MACROECONOMIC INSTABILITY, MACROECONOMIC STABILITY, MARKET FAILURES, MONETARY ECONOMICS, NAFTA, NEGATIVE EFFECT, NEGATIVE SIGN, NET INTEREST MARGIN, 0 HYPOTHESIS, OVERHEAD COSTS, POLICY RESEARCH, POLITICAL ECONOMY, POSITIVE EFFECTS, PRODUCTION FUNCTION, PRODUCTIVITY, PRODUCTIVITY GROWTH, PROFIT RATE, PROFITABILITY, PROMOTING GROWTH, PUBLIC INFRASTRUCTURE, REAL GDP, REAL INTEREST RATE, REAL INTEREST RATES, RETAINED EARNINGS, RISK FACTORS, RISK SHARING, SAVINGS, SERIAL CORRELATION, SIGNIFICANT IMPACT, STATE BANKS, TRADE LIBERALIZATION, TRANSITION ECONOMIES,
Online Access:	http://documents.worldbank.org/curated/en/2006/10/7095002/banking-sector-openness-economic-growth http://hdl.handle.net/10986/9273
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