Banking industry volatility and economic growth

Fariborz Moshirian, Qiongbing Wu

    Research output: Contribution to journalArticlepeer-review

    21 Citations (Scopus)

    Abstract

    Utilizing the recent dynamic panel GMM estimation techniques for 36 markets, this research investigates the relationship between banking industry volatility and future economic growth, and provides empirical evidence complementary to Cole et al. (2008) who examine the finance-growth nexus from a unique asset pricing theory perspective and document a positive relationship between bank stock returns and future economic growth that is significantly influenced by a series of country-specific and banking institutional characteristics. We find that the negative link between banking industry volatility and future economic growth is significantly affected by government ownership of banks, the enforcement of the insider trading law, systemic banking crises, and bank accounting disclosure standards, while the impact of financial development is ambiguous. The significant results are primarily driven by the data from emerging markets.
    Original languageEnglish
    Pages (from-to)428-442
    Number of pages15
    JournalResearch in International Business and Finance
    Volume26
    Issue number3
    DOIs
    Publication statusPublished - 2012

    Keywords

    • banks and banking
    • economic growth
    • emerging markets
    • financial crisis
    • volatility

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