Financial Development and Economic Growth: An Economic Analysis for Singapore
IMF Working Papers, March 1, 1996
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- Financial Development and Economic Growth: An Economic Analysis for Singapore
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Bibliographic details
- Authors: Lamin Y Leigh
- Published: March 1, 1996
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451843217.001
Abstract and Key Findings
- With the emergence of the rapidly expanding literature on endogenous growth, the relationship between financial development and economic growth receives new inspiration.
- Recent cointegration techniques that focus on the estimation and the identification of long-run economic relationship(s) between data variables are particularly appropriate to the study of long run endogenous growth models.
- The paper applies these techniques to the Singapore data using a supply-side framework.
- By and large, the econometric analysis yields results that are in line with predictions of endogenous growth models.
- In particular, the paper finds that financial development positively affects both transitional and long-run growth in Singapore.
Methodology
- Empirical approach: cointegration techniques to estimate and identify long-run economic relationships among data variables.
- Theoretical framing: supply-side framework within endogenous growth model literature.
- Data focus: Singapore-specific data (details and series length are provided in the full working paper).
Subjects and Analytical Focus
- Subject areas listed: Balance of payments; Financial markets; Financial sector development; Foreign direct investment; Human capital; Labor; Production; Total factor productivity.
- Keywords preserved from the source: aggregate production function; Asia and Pacific; Eastern Europe; Financial sector development; Foreign direct investment; growth equation model; growth model; Human capital; output equation; physical capital; production function; Singapore economy; standard error; Total factor productivity; WP.
Interpretation and Policy-Relevant Implications (as implied by findings)
- Strengthening financial development is associated with higher transitional growth and higher long-run growth for Singapore.
- Empirical support for endogenous growth channels suggests policies that foster financial sector development may contribute to sustained economic growth.
Author and Editorial Note
- Disclaimer included in the source: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.
Source: IMF Working Paper — Lamin Y Leigh, "Financial Development and Economic Growth: An Economic Analysis for Singapore", March 1, 1996.