Denizer, CevdetIyigun, Murat F.Owen, Ann L.2014-08-272014-08-272000-11https://hdl.handle.net/10986/19762Countries with more developed financial sectors, experience fewer fluctuations in real per capita output, consumption, and investment growth. But the manner in which the financial sector develops matters. The relative importance of banks in the financial system is important in explaining consumption, and investment volatility. The proportion of credit provided to the private sector, best explains volatility of consumption, and output. The authors generate their main results using fixed-effects estimates with panel data from seventy countries for the years 1956-98. Their general findings suggest that the risk management, and information processing provided by banks, maybe especially important in reducing consumption, and investment volatility. The simple availability of credit to the private sector, probably helps smooth consumption, and GDP.en-USCC BY 3.0 IGOACCOUNTINGAGGREGATE OUTPUTAGGREGATE SUPPLYAGGREGATE SUPPLY CURVEANNUAL GROWTHANNUAL OBSERVATIONSASYMMETRIC INFORMATIONAVERAGE GROWTHAVERAGE GROWTH RATEAVERAGE LEVELBANKING INDUSTRYBANKSBUSINESS CYCLEBUSINESS CYCLESCAPITAL FLOWSCAPITAL MARKETCAPITAL MARKETSCENTRAL BANKCONTAGIONCORPORATE GOVERNANCECOUNTRY CHARACTERISTICSCOUNTRY EFFECTSCOUNTRY REGRESSIONSCOUNTRY RESULTSCOUNTRY SPECIFICCREDIT MARKETSCROSS COUNTRYCROSS-COUNTRY COMPARISONSCROSS-COUNTRY DATACROSS-COUNTRY REGRESSIONCROSS-SECTIONAL DATADATA AVAILABILITYDATA SETDATA SETSDEBTDEPENDENT VARIABLEDEVELOPED COUNTRIESDEVELOPMENT INDICATORSDIVERSIFICATIONDOMESTIC CREDITECONOMIC ACTIVITYECONOMIC DYNAMICSECONOMIC EQUILIBRIUMECONOMIC FLUCTUATIONSECONOMIC GROWTHECONOMIC LITERATUREECONOMIC REVIEWECONOMIC STUDIESECONOMIC THEORYEMPIRICAL EVIDENCEEMPIRICAL LITERATUREEMPIRICAL RESULTSEMPIRICAL STUDIESEMPIRICAL WORKENDOGENOUS GROWTHERROR TERMESTIMATION TECHNIQUESEXCHANGE RATEEXOGENOUS SHOCKSEXOGENOUS VARIABLEEXPLANATORY POWEREXTERNAL SHOCKSFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL INTERMEDIARIESFINANCIAL INTERMEDIATIONFINANCIAL MANAGEMENTFINANCIAL MARKETSFINANCIAL SECTORFINANCIAL SECTORSFINANCIAL SYSTEMSFIXED EFFECTSFIXED EFFECTS ESTIMATIONFOREIGN EXCHANGEGDPGROWTH LITERATUREGROWTH RATEGROWTH RATESGROWTH REGRESSIONSHIGH INCOME COUNTRIESIMPORTSINCOMEINCOME GROWTHINDEPENDENT VARIABLESINDUSTRIALIZED COUNTRIESINFLATIONINFLATION RATEINFORMATION ASYMMETRIESINTEREST RATEINVESTMENT OPPORTUNITIESLABOR MARKETLIQUIDITYLONG RUNM2MACROECONOMIC FACTORSMACROECONOMIC PERFORMANCEMACROECONOMIC VARIABLESMARKET IMPERFECTIONSMONETARY ECONOMICSMONETARY POLICYMONEY SUPPLYNEGATIVE RELATIONSHIPNEGATIVE SIGNNET WORTHOPEN ECONOMIESOUTPUT GROWTHOUTPUT VOLATILITYPER CAPITA CONSUMPTIONPER CAPITA CONSUMPTION GROWTHPER CAPITA INCOMEPER CAPITA INCOMESPOLICY CHANGESPOLICY RESEARCHPOLITICAL ECONOMYPOSITIVE COEFFICIENTPOSITIVE EFFECTPOSITIVE RELATIONSHIPPOVERTY REDUCTIONPRIVATE SECTORPUBLIC SECTORRANDOM EFFECTSREAL GDPREGRESSION TECHNIQUESRELATIVE IMPORTANCERELATIVE SUPPLYRESOURCE ALLOCATIONRISK MANAGEMENTSENSITIVITY ANALYSISSIGNIFICANCE LEVELSIGNIFICANT RELATIONSHIPSMOOTHING CONSUMPTIONSTANDARD DEVIATIONTRANSACTIONS COSTS10.1596/1813-9450-2487