Institute of Information Theory and Automation

Publication details

What Type of Finance Matters for Growth? Bayesian Model Averaging Evidence

Journal Article

Iftekhar H., Horváth Roman, Mareš J.


serial: World Bank Economic Review

project(s): GA16-09190S, GA ČR

keywords: long-term economic growth, Bayesian model, uncertainty

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abstract (eng):

We examine the effect of finance on long-term economic growth using Bayesian model\naveraging to address model uncertainty in cross-country growth regressions. The literature\nlargely focuses on financial indicators that assess the financial depth of banks and\nstock markets. We examine these indicators jointly with newly developed indicators\nthat assess the stability and efficiency of financial markets. Once we subject the finance growth\nregressions to model uncertainty, our results suggest that commonly used indicators\nof financial development are not robustly related to long-term growth. However,\nthe findings from our global sample indicate that one newly developed indicator-the\nefficiency of financial intermediaries-is robustly related to long-term growth.

RIV: AH

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Last modification: 21.12.2012
Institute of Information Theory and Automation