Journal of Econometric Modelling

Journal of Econometric Modelling

Comparison of the Effect of Financial Integration on Economic Growth of Developed and Developing Countries: Empirical Evidence from Generalized Method of Moments

Document Type : Original Article

Authors
zahra Sadighi 1
Amir Mansour Tehranchian 2
Mohammad Taghi Gilak Hakimabadi 2
1 Graduated Master, Department of Economics, University of Mazandaran
2 Associate professor in Economic, Department of Economics, University of Mazandaran
10.22075/jem.2019.18010.1327
Abstract
The wide range of impact has transformed economic growth into one the most important key variables in macroeconomic theories. In this survey, according to the hypothesis and empirical results of Grilli & Feretti (1995), the effect of financial integration on the growth of selected developed and developing countries during (2000-2010) has been examined.For this aim, panel data based on generalized method of moments (GMM) is used to examine the model. This survey showed that the effect of financial integration (net foreign assets as a measure of financial integration) on economic growth in two groups of surveyed countries is not the same. Based on the results of this survey, the financial integration in the selected countries of the Organization for Economic Cooperation and Development (OECD) has a positive effect and in the selected countries of the Middle East and North Africa has a negative effect on economic growth. Therefore, it seems that the level of financial market development and the degree of homogeneity of these markets between countries play a decisive role in the impact of financial integration on economic growth.
Keywords
Financial Integration
Economic Growth
Organization for Economic Cooperation and Development
Middle East and North Africa
Generalized Method of Moment