Authors
Abstract
Many studies have shown positive contribution of financial sector development to economic growth. However some new results indicate that the previous findings do not hold especially in recent years. The main purpose in this study is to examine the structural break between the financial sector development and economic growth in different countries with different levels of income by using the index of bank credit to private sector. For this purpose we use an empirical endogenous growth model and a panel data consisting of 45 countries for 48 years, and test for nonlinearity. We found endogenously structural changes in the relationship of different income groups. The results confirm that the structural changes have occurred, and that the points of structural changes vary with the level of economic development.
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