| Finance and Growth: A Synthesis of Trade and Investment Related Transmission Mechanisms † (2005) | |||||||||||||||||
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| Abstract:: We review the literature on the finance-growth nexus, replicate earlier findings, and extend and modify the existing econometric crosscountry framework, distinguishing between trade- and investment-related aspects of financial openness. Using a new database for 130 countries (including 26 transition economies) for the 1990s, we offer evidence of links between financial development, banking sector competition and growth. Capital account openness is distinct from foreign institutional participation in the domestic sector, affecting growth in a different way. This is confirmed by our regressions. Institutional participation (i.e. services trade) is significantly associated with growth, but capital account openness is not. | |||||||||||||||||
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