Financial development and economic growth: an empirical investigation of the role of banks and institutional investors

This article gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long-run relationship between econo...

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Published in:	Applied financial economics Vol. 22; no. 20; pp. 1719 - 1725
Main Authors:	Cavenaile, Laurent, Sougné, Danielle
Format:	Journal Article Web Resource
Language:	English
Published:	London Routledge 01-10-2012 Routledge, Taylor & Francis Group
Subjects:	banking development Banks Business & economic sciences Causality Economic development Economic growth G-20 Industrialized nations Institutional investments Institutional investors Méthodes quantitatives en économie & gestion OECD panel cointegration Quantitative methods in economics & management Sciences économiques & de gestion Studies
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Abstract	This article gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long-run relationship between economic growth, banking development and institutional investors in six Organization for Economic Co-operation and Development (OECD) countries. Our results highlight some heterogeneity in the long-run relationship between financial development and growth. Institutional investors are shown to support long-run economic growth in only two countries. We also report a negative long-run relationship between both indicators of financial development.
AbstractList	This article gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long-run relationship between economic growth, banking development and institutional investors in six Organization for Economic Co-operation and Development (OECD) countries. Our results highlight some heterogeneity in the long-run relationship between financial development and growth. Institutional investors are shown to support long-run economic growth in only two countries. We also report a negative long-run relationship between both indicators of financial development. [PUBLICATION ABSTRACT] This paper gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long run relationship between economic growth, banking development and institutional investors in 6 OECD countries. Our results highlight some heterogeneity in the long run relationship between financial development and growth. Institutional investors are shown to support long run economic growth in only 2 countries. We also report a negative long run relationship between both indicators of financial development. This article gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long-run relationship between economic growth, banking development and institutional investors in six Organization for Economic Co-operation and Development (OECD) countries. Our results highlight some heterogeneity in the long-run relationship between financial development and growth. Institutional investors are shown to support long-run economic growth in only two countries. We also report a negative long-run relationship between both indicators of financial development. This article gives a new light on the finance-growth nexus through the investigation of the role of institutional investors as providers of risk diversification in the process of economic growth. We make use of panel cointegration techniques to study the potential long-run relationship between economic growth, banking development and institutional investors in six Organization for Economic Co-operation and Development (OECD) countries. Our results highlight some heterogeneity in the long-run relationship between financial development and growth. Institutional investors are shown to support long-run economic growth in only two countries. We also report a negative long-run relationship between both indicators of financial development. Reprinted by permission of Routledge, Taylor and Francis Ltd.
Author	Sougné, Danielle Cavenaile, Laurent
Author_xml	– sequence: 1 givenname: Laurent surname: Cavenaile fullname: Cavenaile, Laurent email: Laurent.Cavenaile@ulg.ac.be organization: HEC-Management School, University of Liège. Rue Louvrex – sequence: 2 givenname: Danielle surname: Sougné fullname: Sougné, Danielle organization: HEC-Management School, University of Liège. Rue Louvrex
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SubjectTerms	banking development Banks Business & economic sciences Causality Economic development Economic growth G-20 Industrialized nations Institutional investments Institutional investors Méthodes quantitatives en économie & gestion OECD panel cointegration Quantitative methods in economics & management Sciences économiques & de gestion Studies
Title	Financial development and economic growth: an empirical investigation of the role of banks and institutional investors
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