The finance-growth nexus in Latin America and the Caribbean: A meta-analytic perspective.

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Author: Ichiro Iwasaki
Date: Jan. 2022
From: World Development(Vol. 149)
Publisher: Elsevier Science Publishers
Document Type: Report; Brief article
Length: 344 words

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Keywords Financial development and liberalization; Economic growth; Meta-analysis; Publication selection bias; Latin America and the Caribbean Highlights * This paper performs a meta-analysis of the finance-growth nexus in Latin America and the Caribbean. * Results demonstrates that financial development and liberalization are likely to enhance economic growth in the region, and these policy measures have the potential to have a meaningful impact on the real economy. * It is also confirmed that the existing literature contains genuine empirical evidence of the growth-promoting effect of finance in the region. Abstract This paper performs a meta-analysis of the effect of financial development and liberalization on macroeconomic growth in Latin America and the Caribbean using a total of 233 estimates collected from 21 previous works. Meta-synthesis of the collected estimates demonstrates that it is probable that financial development and liberalization enhance economic growth in the region, and these policy measures have the potential to have a meaningful impact on the real economy. The synthesis results also reveal that the choice of financial variables significantly affects reported estimates in the literature. Meta-regression analysis of literature heterogeneity and test for publication selection bias produce findings that are compatible with the synthesis results. The test results of publication selection bias also confirm that the existing literature contains genuine empirical evidence of the growth-promoting effect of finance in the region. Author Affiliation: Institute of Economic Research, Hitotsubashi University, Tokyo, Japan Article History: Accepted 1 September 2021 (footnote)[white star] This research was supported financially by the Japan Center for Economic Research (JCER) and the Zengin Foundation for Studies on Economics and Finance. I am grateful to Chuan Liao (editor-in-chief) and two anonymous reviewers of the journal for their helpful comments and suggestions. I thank Heiko Rachinger for providing a STATA code of the endogenous kinked model (), Michie Kano and Eriko Yoshida for their research assistance, and Tammy Bicket for her editorial assistance. I also wish to express my deepest respect to the authors of the articles included in the meta-analysis in this paper. The usual disclaimer applies. Byline: Ichiro Iwasaki [iiwasaki@ier.hit-u.ac.jp]

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Gale Document Number: GALE|A679876603