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International Finance Discussion Papers
The International Finance Discussion Papers logo links to the International Finance Discussion Papers home page Finance and Macroeconomic Volatility
Cevdet Denizer; Murat F. Iyigun; Ann L. Owen
2000-670  (June 2000)

Abstract:  Countries with more developed financial sectors experience less fluctuation in the growth of real per capita output, consumption and investment. However, the manner in which the financial sector develops matters. The relative importance of banks in the financial system is important in explaining consumption and investment volatility, and the proportion of credit provided to the private sector explains the volatility of consumption and output. The main results are generated using fixed-effects estimation with panel data from 70 countries covering the years 1956 through 1998.

Full paper (334 KB PDF)

Keywords
financial development, economic fluctuations, business cycles.

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Last update: July 19, 2001