Financial Development, Economic Growth and Volatility
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The article mainly investigates the relationships between financial development, economic growth and economic volatility. After introducing the importance of the financial development in economic growth and economic volatility, the article gives a brief literature review about relevant researches. Then the theoretical model is established involving panel model with fixed effect, nonlinear model, endogenous model and logistic model. The empirical results prove that financial development stimulates economic growth, while fails to prove the significance of effect on economic volatility. It verifies the reverse causality between financial development and economic growth, which results the endogeneity issue. Meanwhile, it is found the increasing probability of recession due to financial development. Finally, practical policy recommendations of dynamically adjusting the financial development and some suggestions for further researches are presented.
Financial development, Economic growth, Economic volatility