HEC-Ecole de gestion de l'Université de Liège
HEC-Ecole de gestion de l'Université de Liège

An Empirical Re-assessment of the Finance-Growth Nexus

Hobelsberger, Karin ULiège
Promotor(s) : Artige, Lionel ULiège
Date of defense : 20-Jan-2020 • Permalink :
Title : An Empirical Re-assessment of the Finance-Growth Nexus
Author : Hobelsberger, Karin ULiège
Date of defense  : 20-Jan-2020
Advisor(s) : Artige, Lionel ULiège
Committee's member(s) : Tharakan, Joseph ULiège
Lejeune, Thomas ULiège
Language : English
Number of pages : 112
Keywords : [en] financial development, Financial Development Index, Finance-Growth Nexus, economic growth, Principal Component Analysis, growth empirics, Pooled Mean Group Estimation, Generalized Method of Moments Estimation
Discipline(s) : Business & economic sciences > Macroeconomics & monetary economics
Target public : Researchers
Professionals of domain
Institution(s) : Université de Liège, Liège, Belgique
Degree: Master en sciences économiques, orientation générale
Faculty: Master thesis of the HEC-Ecole de gestion de l'Université de Liège


[en] This paper deals with the potential positive effect of financial development on economic growth, also known as the Finance-Growth Nexus. Much uncertainty and contradiction surround the subject matter. Based on the uncertain problem set at hand, the purpose of this study is to reduce ambiguity and provide a basis for future, more detailed research. The paper aims to add value by further refining the theoretical definition of financial development, as well as further developing empirical measurement. Furthermore, a large set of financial development variables and different estimation techniques are systematically tested against a harmonized data set, in order to increase the neutrality and comparability of results. However, results of various regression iterations were neither stable, nor always fully comparable due to changes in sample composition. Ergo, the high degree of uncertainty remains, and the author cannot reject the Null Hypothesis that there is no stable correlation between financial development and economic growth. There are many different potential explanations, but all lead to the same conclusion. Perhaps the mechanisms, interrelations and potential effects of financial development on economic growth cannot be measured from a macro perspective. Instead, focusing on a micro approach in future research could potentially add value.



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  • Hobelsberger, Karin ULiège Université de Liège > Master. sc. éco., or. gén.


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