Purpose In this paper, the heterogeneity of the linkages among financial development, productivity and growth across income groups is emphasized. Design/methodology/approach An empirical analysis is conducted with an illustrative sample of 130 economies over the period 1991–2019 and classified into four subsamples: Organisation for Economic Co-operation and Development (OECD), developing, least developed and net food importing developing countries. Forecast error variance decompositions and panel vector auto-regressive estimations are computed, with insightful findings. Findings Higher levels of output stimulate the economic development in the agricultural sector, mainly via the productivity channel and, in the most developed economies, also through access to credit. Differently, in developing and least developed economies, the role of access to credit is marginal. The findings have practical implications for stakeholders involved in the planning of long-run investments. In less developed economies, priorities should be given to investments in technology and innovation, whereas financial markets are more suited to boost the development of the agricultural sector of developed economies. Originality/value The authors conclude on the credit–output–productivity nexus and contribute to the literature in (at least) three ways. First, they assess how credit access, agricultural output and agricultural productivity are jointly determined. Second, they use a novel approach, which departs from most of the case studies based on single-country data. Third, they conclude on potential causality links to conclude on policy implications.

Magazzino, C., Santeramo, F.G. (2023). Financial Development, Growth, and Productivity. JOURNAL OF ECONOMIC STUDIES [10.1108/JES-07-2022-0397].

Financial Development, Growth, and Productivity

Magazzino, Cosimo
;
2023-01-01

Abstract

Purpose In this paper, the heterogeneity of the linkages among financial development, productivity and growth across income groups is emphasized. Design/methodology/approach An empirical analysis is conducted with an illustrative sample of 130 economies over the period 1991–2019 and classified into four subsamples: Organisation for Economic Co-operation and Development (OECD), developing, least developed and net food importing developing countries. Forecast error variance decompositions and panel vector auto-regressive estimations are computed, with insightful findings. Findings Higher levels of output stimulate the economic development in the agricultural sector, mainly via the productivity channel and, in the most developed economies, also through access to credit. Differently, in developing and least developed economies, the role of access to credit is marginal. The findings have practical implications for stakeholders involved in the planning of long-run investments. In less developed economies, priorities should be given to investments in technology and innovation, whereas financial markets are more suited to boost the development of the agricultural sector of developed economies. Originality/value The authors conclude on the credit–output–productivity nexus and contribute to the literature in (at least) three ways. First, they assess how credit access, agricultural output and agricultural productivity are jointly determined. Second, they use a novel approach, which departs from most of the case studies based on single-country data. Third, they conclude on potential causality links to conclude on policy implications.
2023
Magazzino, C., Santeramo, F.G. (2023). Financial Development, Growth, and Productivity. JOURNAL OF ECONOMIC STUDIES [10.1108/JES-07-2022-0397].
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11590/438707
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