Tell me where to stop: thresholds in the bank lending and output growth relationship
Journal
Empirical Economics
Date Issued
April 2021
Abstract
The relationship between the growth of financial development and output growth is examined both analytically and empirically, using a long series of data for the seven largest economies in the world. The findings suggest that, other things being constant, a positive relationship between lending and output growth exists, however with diminishing returns after a country-specific threshold. These findings assist in explaining the findings of earlier studies and bear various policy implications.