Derivatives and economic growth: Links and evidence. The impact of the financial derivatives on the real economy
DOI:
https://doi.org/10.24215/23143738e065Keywords:
derivatives, developed markets, economic growth, emerging marketsAbstract
This paper studies the links between the development of derivative markets and economic growth. By acknowledging the shortness of samples hindering any robust econometric analysis, it sets out and empirically checks those links, adopting statistical correlation techniques. It uses developed and emerging economy data over the most extensive period possible and tests for the presence of a structural break after the 2008-2009 crisis. The general result is that derivatives are positively correlated with economic growth, in particular, through the investment and international trade links. Another general result is that there is a concave relationship between growth and derivatives in the case of developed countries.
Downloads
Metrics
References
Andersen, T. B., & Tarp, F. (2003). Financial Liberalization, Financial Development and Economic Growth in LDCs. Journal of International Development, No 15, 189-209.
Bank for International Settlements. (19 de Septiembre de 2016). BIS Statistics Explorer. Obtenido de Bank for International Settlements: http://stats.bis.org/statx/toc/DER.html
Bodnar, G., & Gebhardt, G. (1998). Derivatives usage in risk management by U.S. and German non-financial firms: A comparative survey. NBER Working Paper No. 6705.
Cecchetti, S., & Kharroubi, E. (2012). Reassessing the impact of finance on growth. BIS Working Papers, No. 381.
Cecchetti, S., & Kharroubi, E. (2015). Why does financial sector growth crowd out real economic growth? BIS Working Papers, No. 490.
Fender, I. (2000). Corporate Hedging: The Impact of Financial Derivatives on the Broad Credit Channel of Monetary Policy. BIS Working Paper, No. 94.
Hakan, Y. (2011). Thresholds in the Finance-Growth Nexus: A Cross-Country Analysis. The World Bank Economic Review, Vol. 25 (2), 278–295.
Levine, R. (2004). Finance and Growth: Theory and Evidence. NBER Working Paper No. 10766.
Levine, R. & Zervos, S. (1996). Stock Market Development and Long-Run Growth. The World Bank Economic Review, Vol. 10 (2), 323–339.
Levine, R., & Zervos, S. (1998). Stock Markets, Banks, and Economic Growth. The American Economic Review, Vol. 88, No. 3.
Love, I., & Zicchino, L. (2006). Financial development and dynamic investment behavior: Evidence from panel VAR. The Quarterly Review of Economics and Finance, Vol. 46, 190-210.
Michalopoulos, S., Laeven, L., & Levine, R. (2009). Financial Innovation and Endogenous Growth. NBER Working Paper No. 15356.
MSCI. (11 de Junio de 2016). Market Classification. Obtenido de MSCI: https://www.msci.com/market-classification
Prabha, A., Savard, K., & Wickramarachi, H. (2014). Deriving the Economic Impact of Derivatives, Growth through Risk Management. Los Angeles. Estados Unidos: Milken Institute.
Rousseau, P., & Wachtel, P. (2009). What is happening to the impact of financial deepening on economic growth? Vanderbilt University, Working Paper No. 09-W15.
Si, W. (2014). Foreign Exchange Derivatives and International Trade in China. Financial Markets & Corporate Governance Conference, 2015.
The World Bank. (24 de Junio de 2016). Global Financial Development. Retrieved from the World Bank: http://data.worldbank.org/data-catalog/global-financial-development
The World Bank. (10 de Agosto de 2016). World Development Indicators. Obtenido de World Bank: http://data.worldbank.org/data-catalog/world-development-indicators
Tissot, B. (2015). Derivatives statistics: the BIS contribution. 60th ISI World Statistics Congress, (págs. 139-144). Rio de Janeiro, Brazil.
Yorulmazer, T. (2012). Has Financial innovation Made the World Riskier? CDS, Regulatory Arbitrage and Systemic Risk. Federal Reserve Bank of New York.
Downloads
Additional Files
Published
How to Cite
Issue
Section
License
Those authors who have publications with this journal, agree with the following terms:
a. Authors will retain its copyright and will ensure the rights of first publication of its work to the journal, which will be at the same time subject to the Creative Commons Atribución-NoComercial-CompartirIgual 4.0 Internacional (CC BY-NC-SA 4.0) allowing third parties to share the work as long as the author and the first publication on this journal is indicated.
b. Authors may elect other non-exclusive license agreements of the distribution of the published work (for example: locate it on an institutional telematics file or publish it on an monographic volume) as long as the first publication on this journal is indicated,
c. Authors are allowed and suggested to disseminate its work through the internet (for example: in institutional telematics files or in their website) before and during the submission process, which could produce interesting exchanges and increase the references of the published work. (see The effect of open Access)