Financial Systems and Economic Growth: Empirical Evidence from Australia

Abstract

This paper has examined the dynamic impact of both bank- and market-based financialdevelopment on economic growth in Australia ? during the period 1980 to 2012. The studyuses the autoregressive distributed lag bounds (ARDL) testing approach to examine thislinkage. Unlike some previous studies, this study uses financial sector development indices tomeasure both bank- and market-based financial development. These indices were computedusing the method of means-removed average. The empirical results of this study show that whilebank-based financial development has a short-run positive impact on economic growth in Australia,market-based financial development has no significant impact on economic growth, both in the shortrun or in the long run. (This abstract was borrowed from another version of this item.)