Financial market and economic growth: outlines of the problem by david kandel

Author:david kandel [david kandel]
Language: eng
Format: epub
Published: 2020-11-22T16:00:00+00:00

, which characterizes the type of financial loans

structure, is a factor, in terms of the degree of influence on economic growth, almost comparable to the indicator of financial depth. It is statistically significant for Sweden, South Korea, South Africa, Turkey and is close to that for Chile, Trinida-and-Tobago,

Canada, and Singapore. This conclusion contrasts with the previously mentioned results of empirical tests of the influence of the financial structure on economic growth, in particular, the calculations of R. Livin. However, it seems that this may well be due to differences in research methodology and composition of country samples.

Finally, attention is drawn to the presence of a close correlational relationship

​ capital ​ securities ​ financial assets

between the indicators of ​ and ​ and ​ in the case of loans to GD P

some countries (Norway, Singapore, USA, Sweden, Colombia), which negatively affects the quality of the corresponding regression equations due to the emergence of such a phenomenon as multicollinearity, which is eliminated by excluding one of these indicators from the independent variables.

In this sense, the case of the United States is interesting: indicators of financial depth and structure are not only strongly correlated with each other, but also with the share of investment in GDP. The alternating inclusion of these indicators and comparison of the quality of the models demonstrated that the investment indicator is the most adequate variable to explain

GDP dynamics of economic growth. Thus, the US financial market, the most capacious in the world, seems to have a positive impact on economic growth indirectly through the dynamics of investments in the real sector.

2.4 Impact of the financial market on R&D in the context of economic growth

Research and development is now considered one of the main drivers of economic growth. The notion that not only the accumulation of the forehead vecheskogo and physical capital, as scientific and technological progress embodied in the inventions and innovations that largely determines the dynamics of economic development, was expressed in a number of classic works of the early 90-ies of XX century, made GOVERNMENTAL in line with the theory of endogenous economic growth.[ 80 ]

As demonstrated above, the influence of the financial market on economic growth is also one of the most rapidly developing research programs within the framework of this theory. In addition, empirical studies indicate that financial market institutions have a significant impact on the dynamics of the development of industries, primarily those associated with R&D. In the United States, in particular, firms in the pharmaceutical, electronics , and biotechnology industries are far more dependent on access to outside funding than companies in traditional industries such as the steel or automotive industries.

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