Browsing by Author "Carreira, Ricardo"
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- A different look over the financial depth nonlinearity: evidence from EuropePublication . Fuinhas, José Alberto; Marques, António Cardoso; Carreira, RicardoThe nonlinear relationship between Economic Growth and Financial Depth was assessed for a panel of 25 European countries, for the period from 1996 to 2011. These countries share common spatial patterns as was confirmed by the presence of cross-sectional dependence. Furthermore, heteroskedasticity and first order autocorrelation are present in the panel. The Hausman test supports the presence of heterogeneity by selecting the fixed effects model. Accordingly, the robust estimator for these phenomena, the Driscoll and Kraay with fixed effects was used. The nonlinearity of the relationship was confirmed by the U-test of Lind and Mehlum. In short, results confirmed that excess financial development constrains growth for European countries. The optimal dimension of the financial sector should be considered by policymakers.