Bayraktar, NihalWang, Yan2012-06-262012-06-262006-10https://hdl.handle.net/10986/9273Banking sector openness may directly affect growth by improving the access to financial services and indirectly by improving the efficiency of financial intermediaries, both of which reduce the cost of financing, and in turn, stimulate capital accumulation and economic growth. The objective of the paper is to empirically reinvestigate these direct and indirect links using a more advanced econometric technique (GMM dynamic panel estimators). An illustrative model is presented to link financial market development with investment. The empirical results confirm the presence of direct and indirect links, and thus provide support for countries planning to open their banking sector for international competition.en-USCC BY 3.0 IGOACCOUNTINGACTUAL COSTALLOCATIVE EFFICIENCYAUDITINGBANK ASSETSBANK OF KOREABANKING SECTORBANKING SERVICESBORROWINGCAPACITY BUILDINGCAPITAL ACCUMULATIONCAPITAL FLIGHTCAPITAL INVESTMENTCAPITAL MOBILITYCOMPETITIVENESSCONSTANT RETURNS TO SCALECONSUMERSCOST OF CAPITALCOUNTRY LEVELDEBTDEPENDENT VARIABLEDESCRIPTIVE STATISTICSDEVELOPED COUNTRIESDEVELOPING COUNTRIESDEVELOPMENT ECONOMICSDOMESTIC CREDITDYNAMIC PANELEARNING ASSETSECONOMETRICSECONOMIC GROWTHECONOMIC LITERATUREECONOMIC STATISTICSECONOMIC STUDIESEMPIRICAL ANALYSISEMPIRICAL EVIDENCEEMPIRICAL MODELEMPIRICAL RESULTSEMPIRICAL SECTIONEMPIRICAL STUDIESEMPLOYMENTEMPLOYMENT EQUATIONSENTREPRENEURSHIPEQUATIONSERROR TERMERROR TERMSESTIMATED COEFFICIENTSESTIMATION METHODESTIMATION RESULTSEXPECTED RETURNSEXPECTED VALUEEXPLANATORY VARIABLESFINANCIAL DEPTHFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIARY DEVELOPMENTFINANCIAL INTERMEDIATIONFINANCIAL LIBERALIZATIONFINANCIAL MARKETSFINANCIAL REGULATIONFINANCIAL SECTORFINANCIAL SERVICESFOREIGN BANKSFOREIGN ENTRYFUNCTIONAL FORMGDPGDP PER CAPITAGLOBALIZATIONGROWTH IMPACTGROWTH LITERATUREGROWTH MODELGROWTH MODELSGROWTH RATEGROWTH REGRESSIONSHIGH INFLATIONHUMAN CAPITALIMPROVING PRODUCTIVITYINDEPENDENT VARIABLESINFLATIONINFLATION RATEINTEREST INCOMEINTEREST RATEINTEREST RATESINTERNATIONAL COMPETITIONINVESTMENT RATELAGGED LEVELSLAWSLIBERALIZATION OF FINANCIAL MARKETSLIQUIDITYLONG-RUN GROWTHLOW INTEREST RATESLOWERING BARRIERSMACROECONOMIC INSTABILITYMACROECONOMIC STABILITYMARKET FAILURESMONETARY ECONOMICSNAFTANEGATIVE EFFECTNEGATIVE SIGNNET INTEREST MARGIN0 HYPOTHESISOVERHEAD COSTSPOLICY RESEARCHPOLITICAL ECONOMYPOSITIVE EFFECTSPRODUCTION FUNCTIONPRODUCTIVITYPRODUCTIVITY GROWTHPROFIT RATEPROFITABILITYPROMOTING GROWTHPUBLIC INFRASTRUCTUREREAL GDPREAL INTEREST RATEREAL INTEREST RATESRETAINED EARNINGSRISK FACTORSRISK SHARINGSAVINGSSERIAL CORRELATIONSIGNIFICANT IMPACTSTATE BANKSTRADE LIBERALIZATIONTRANSITION ECONOMIESBanking Sector Openness and Economic GrowthWorld Bank10.1596/1813-9450-4019