The data set comes from the World Development Indicators (WDI) and the World Bank Financial Development and Structure Database.
Using panel data from 1980 to 2010 in 87 countries. The data set is averaged over a five-year period to verify the use of GMM estimates (large N and small T are generally required), which requires a large number of cross-sectional units (N) and a small number of time periods (T) (ie 1980-1984, From 1985 to 1989, from 1990 to 1994, from 1995 to 1999, from 2000 to 2005, from 2006 to 2010). In addition, data averaging also helps smooth the business cycle effects. Therefore, up to 6 observations can be obtained for each variable in each country (taking into account lag).
Three financial development indicators-private sector credit, current liabilities and domestic credit, together constitute the financial development level indicator, and all three indicators are expressed as a ratio of GDP.
The following are similar/related definitions for some of the above indicators: The definition of
private sector credit is the value of financial intermediary credit to the private sector.
Current liabilities measure the ability of banks to raise funds or the size of the banking system relative to the economy.
Domestic credit includes private credit and credit to the public sector (central and local governments and public enterprises).
These banking sector development indicators are used because bank credit is the only viable source of financing for most developing countries in the sample.
Economic development indicators:
average economic growth rate , per capita initial real GDP (at a constant price of $2,000) and population growth are derived from the World Development Indicators.
The average number of years of secondary education is collected from the Barro and Lee data set.
Investment (as a percentage of GDP) comes from the University of Pennsylvania World University.
In order to test the robustness of the results, other growth determinants were also included, namely trade openness, government spending, inflation and institutions .
The data mainly comes from the World Development Indicators (World Development Indicators), except for institutions, which come from the International Country Risk Guide.
Tables 1 and 2 respectively give the descriptive statistics and correlation matrix of the variables used in the analysis.
Table 1 Descriptive statistics
Table 2 Correlation matrix
Financial development
of private sector credit
-current liabilities
Domestic credit
trade liberalization
mechanism (INS)
in government spending
inflation
Financial Development
Private Sector at Credit
Liquid Liabilities
Domestic at Credit
Trade's Openness
Institutions (INS)
Government Expenditure
Inflation
Some economic indicators are as follows:
Economic Growth
Initial of Per Capita GDP
Human Capital
Population Growth
Investment
growth
per capita gross domestic product of the initial
human capital
population growth
investment
The ultimate requirement is the relationship between finance and economic growth, that is, finance is the independent variable and economic growth is the dependent variable. The regression equation used is: the
level of financial development is expressed by FINit, and the specific meaning is private sector credit, current liabilities, domestic credit, etc. The percentage of these indicators in GDP is used as its specific value.
Xit includes the lagged terms of dependent variables and other endogenous variables (economic development is a dynamic process, so we think there are lagged terms), and some exogenous variables. Among them, we think that some are related to the error term (divided as X2it), and some are not related to the error term (divided as X1it).
ui is the fixed effect of the i-th country/region.