Contents

Financial Development and Economic Growth in Korea

Hwang, Sun Joo

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dc.contributor.authorHwang, Sun Joo-
dc.date.accessioned2020-04-13T01:18:08Z-
dc.date.available2020-04-13T01:18:08Z-
dc.date.issued2020-02-
dc.identifier.urihttps://archives.kdischool.ac.kr/handle/11125/34323-
dc.description.abstractDoes financial development contribute to economic growth? The literature finds that an expansion in financial resources is useful for economic growth if the degree of financial development is under a certain threshold; otherwise, the expansion is detrimental to growth. Almost every published study, however, considers country-panel data. Accordingly, the results are not directly applicable to the Korean economy. By examining Korean time-series data, this paper finds that there is an inverse U-shaped relationship between the per capita real GDP growth rate and private credit (as a percentage of nominal GDP)―a well-known measure of quantitative financial development, where the threshold is 171.5%. This paper also finds that private credit is positively associated with economic growth if the share of household credit out of private credit is less than 46.9%; otherwise, private credit is negatively associated with economic growth. As of 2016, the ratio of private credit to GDP and the ratio of household credit to private credit are both higher than the corresponding thresholds, which implies that policymakers should place more emphasis on qualitative financial development than on a quantitative expansion of financial resources.en_US
dc.languageengen_US
dc.publisherKorea Development Instituteen_US
dc.titleFinancial Development and Economic Growth in Koreaen_US
dc.typeArticleen_US
dc.identifier.bibliographicCitationKDI Journal of Economic Policy, vol. 42, no. 1, pp. 31-56-
dc.citation.endPage56en_US
dc.citation.number1en_US
dc.citation.startPage31en_US
dc.citation.titleKDI Journal of Economic Policyen_US
dc.citation.volume42en_US
dc.identifier.doihttps://doi.org/10.23895/kdijep.2020.42.1.31-
dc.subject.keywordFinancial Development; Economic Growth; Private Credit; Household Crediten_US
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