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Title: Debt overhang, financial sector development and economic growth
Authors: Hwang, Jen Te;Chung, C.-P.;Wang, Chieh Hsuan
Contributors: 經濟系
Keywords: Debt Overhang Hypothesis;Dynamic GMM;Dynamic Panel Data;Economic Growth;Financial Sector Development
Date: 2010-06
Issue Date: 2015-06-29 17:26:35 (UTC+8)
Abstract: This paper uses panel data of 20 high external debt countries selected from Asia and Latin-America to investigate the financial sector development-debt- growth nexus within the framework of an endogenous growth and financial development mechanism. First, we found that among 20 high external debt countries, the external debt-to-GDP ratio is significantly negatively correlated with economic growth rates, indicating that excessive debt is detrimental to the growth of an economy. Second, we introduced the simultaneous GMM equations between financial sector development and economic growth to evaluate the interaction effects among economic growth, external debt, and financial sector development. In empirical results, we find that the negative impact of high debt on growth appears to operate through a strong negative effect, in terms of compulsion to resort to financially repressive policies. In addition, we also find a two-way relationship between financial sector development and economic growth.
Relation: Hitotsubashi Journal of Economics, 51(1), 12-30
Data Type: article
Appears in Collections:[經濟學系] 期刊論文

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