Document Type : ORIGINAL ARTICLE
Authors
Abstract
In this research, it has been tried to analyze the effect of financial development on economic growth in selected member States of Organization of Economic Cooperation and Development with Upper Middle Income countries and compare them with each other. To do this, 5 financial development indicators have been used which include: The ratio of private credit by deposit money banks to GDP, the ratio of liquid liabilities to GDP, the ratio of deposit money bank assets to GDP, the ratio of private credit by deposit money banks and other financial institutions to GDP and the ratio of bank deposits to GDP.
Estimation of the model, by using panel data econometric method, has been used for 23 member states of Organization of Economic Cooperation and Development and 26 countries with Upper Middle Income during 1980 -2009. Selected method in panel data which has been used to estimate model based on Limer Test and Hausman Test is fixed effect method.
Results indicate that financial development has negative and significant effect on economic growth of selected countries and since the member states of Organization of Economic Cooperation and Development enjoy higher development, the intensity of this effect for this class of countries is lower. Also the effects of other variables such as government size, inflation rate, lag of real GDP per capita, investment and openness is based on theoretical expectation.
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