Stock Markets, Banks, and Growth : Correlation or Causality?

The authors investigate the impact of stock markets and banks on economic growth using a panel data set for 1976-98 and applying recent generalized method of moments (GMM) techniques developed for dynamic panels. The authors illustrate econometrica...

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Bibliographic Details
Main Authors:	Beck, Thorsten, Levine, Ross
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	BANKS BLACK MARKET BLACK MARKET PREMIUM BUSINESS CYCLE CAPITAL ACCUMULATION CAPITAL CONTROLS CORPORATE GOVERNANCE COUNTRY SPECIFIC COVARIANCE MATRIX CREDIT MARKETS DEFLATORS DEPENDENT VARIABLE DESCRIPTIVE STATISTICS DEVELOPING COUNTRIES DEVELOPMENT INDICATORS DEVELOPMENT RESEARCH DYNAMIC PANEL DYNAMIC PANEL MODELS ECONOMETRICS ECONOMIC GROWTH ECONOMIC LITERATURE ECONOMIC PERFORMANCE ECONOMIC REVIEW ECONOMIC STUDIES ECONOMIC THEORY ECONOMICS EMPIRICAL LITERATURE EMPLOYMENT EQUATIONS EQUITY MARKETS ERROR TERM ERROR TERMS EXPLANATORY VARIABLES EXPORTS EXTERNALITIES FINANCIAL DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL STRUCTURES FINANCIAL SYSTEMS FIXED EFFECTS GDP GDP PER CAPITA GOVERNMENT EXPENDITURES GROSS DOMESTIC PRODUCT GROWTH DETERMINANTS GROWTH REGRESSION GROWTH REGRESSIONS HUMAN CAPITAL INCOME INFLATION INFLATION RATE LAGGED DEPENDENT LAGGED LEVELS LAGGED VALUES LIQUIDITY LONG-RUN GROWTH MARKET CAPITALIZATION MEASUREMENT ERRORS MONETARY ECONOMICS NEGATIVE IMPACT 0 HYPOTHESIS POLICY RESEARCH PRIVATE SECTOR REAL GDP RESOURCE ALLOCATION REVERSE CAUSALITY SERIAL CORRELATION STATISTICAL ANALYSIS STOCK MARKETS TIME SERIES TRADE OPENNESS TRANSACTION COSTS TRANSACTIONS COSTS
Online Access:	http://documents.worldbank.org/curated/en/2001/09/1614762/stock-markets-banks-growth-correlation-or-causality http://hdl.handle.net/10986/19535

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Summary:	The authors investigate the impact of stock markets and banks on economic growth using a panel data set for 1976-98 and applying recent generalized method of moments (GMM) techniques developed for dynamic panels. The authors illustrate econometrically the differences that emerge from different panel procedures. On balance, stock markets and banks positively influence economic growth--and these findings are not a result of biases induced by simulaneity, omitted variables, or inobserved country-specific effects.

Stock Markets, Banks, and Growth : Correlation or Causality?

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