The Effect of Shadow Banking on Economic Growth in Selected Countries

Articles in Press

Document Type : Original Article

Authors

1 PHD Student of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran

2 Professor of economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran

3 Associate Professor of Economics, Faculty of Economics & Administrative Science, University of Mazandaran, Babolsar, Iran

10.22075/jem.2025.37115.1999

Abstract

Shadow banking, as a part of the financial system operating outside the direct supervision of central banks and regulatory institutions, plays a significant role in financing and resource allocation. Given the expansion of shadow banking assets and its impact on macroeconomic variables especially economic growth—this study examines the effect of shadow banking on economic growth in two groups of selected countries (including developed and developing countries) over the period 2002 to 2023. To model the relationships among variables, the dynamic panel method is employed, and the model is estimated using the Generalized Method of Moments (GMM) technique. The estimation results for both groups of countries indicate that the expansion of shadow banking assets leads to an increase in economic growth, and this effect is further amplified through the channel of domestic credit to the private sector.

Keywords

Journal of Econometric Modelling

Articles in Press, Accepted Manuscript
Available Online from 04 October 2025

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