Publication Type

Conference Paper

Version

submittedVersion

Publication Date

3-2022

Abstract

This paper estimates bank and stock market efficiency associations with real per capita GDP growth by examining panel-data across three different regions using Beck-Katz Panel-Corrected Standard Errors (PCSE) regression. It allows heteroskedastic and/or contemporaneously correlated disturbances across panels, with to specify a common first-order autocorrelation within the panel. The results suggest efficiency effects on growth is not unambiguous. The results suggest a threshold beyond which increase in bank overhead cost hurts economic growth, for developing countries. Likewise, there is a threshold beyond which increase in stock market turnover ratio hurts economic growth, for developed countries. One policy implication of the findings is that bank leaders and policy makers should take precautionary measures on overhead costs and stock market liberalisation policies so that savings are efficiently allocated through the financial system between financial and real sectors.

Keywords

financial development, efficiency, economic growth, panel corrected standard error

Discipline

Finance | Growth and Development | Regional Economics

Publication

Singapore Economic Review Conference (SERC)

Publisher

World Scientific

City or Country

Singapore

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