Linking the missing market: The effect of bond markets on economic growth

Past studies have largely focused on the positive role of banks and stock markets on economic growth. This paper adds bond markets as a third key component of the financial system. Using a panel data set of 38 countries, and applying the generalized method of moments techniques for dynamic panels, w...

Full description

Saved in:
Bibliographic Details
Published in:International review of economics & finance 2013-06, Vol.27, p.529-541
Main Authors: Thumrongvit, Patara, Kim, Yoonbai, Pyun, Chong Soo
Format: Article
Language:English
Subjects:
Banks
Bond markets
Economic growth
Financial market
Generalized method of moments
Manycountries
Panel data analysis
Stock exchanges
Studies
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:Past studies have largely focused on the positive role of banks and stock markets on economic growth. This paper adds bond markets as a third key component of the financial system. Using a panel data set of 38 countries, and applying the generalized method of moments techniques for dynamic panels, we find that (i) stock market development is positively related to economic growth; (ii) the contributing role of bank credit to economic growth diminishes as domestic bond markets develop; (iii) government bonds are positively related to economic growth, while the effects of corporate bonds change from negative to positive, as domestic financial structures expand in size and diversity. ► The role of finance on economic growth is analyzed with panel data. ► Stock market development is positively related to economic growth. ► The impact of bank financing diminishes as bond markets develop. ► The contribution of corporate bond market is time-varying. ► The effect of government bond market is positive and significant.
ISSN:1059-0560
1873-8036
DOI:10.1016/j.iref.2013.01.008