Abstract
The present paper investigates whether the link between stock markets, banks, and economic growth becomes more evident as more homogeneous groups of countries are considered. The dynamic panel generalized method of moment (GMM) estimator with Windmeijer (2005) correction is employed using data of European and non-European high-income countries as well as upper and lower middle-income countries averaged over five and three years. Our results indicate that the link between financial development and economic growth depends on the stages of economic growth of the countries. As more homogeneous economies are involved in a panel, a more economically stylized link is uncovered.
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