Financial Intermediation versus Direct Financing: A Meta-Analytic Comparison of the Growth-Enhancing Effect

Ichiro Iwasaki and Shigeki Ono

No 2024-01, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: This study is the first meta-analysis to compare financial intermediation and direct financing in terms of their growth-promoting effects. Meta-synthesis of 1693 estimates extracted from 168 previous studies strongly suggest that, in general, financial development has a positive effect on economic growth and the synthesized effect size of the direct financing study exceeding that of the financial intermediation study. The two exceptions are when the average estimation year is limited to 1989 or before and when the target region is restricted to Latin America and the Caribbean. Results from metaregression analysis and tests for publication selection bias show, however, that some synthesis results cannot be reproduced when literature heterogeneity and publication selection bias are taken into consideration.

Keywords: financial intermediation; direct financing; growth-promoting effect; meta-synthesis; meta-regression analysis; publication selection bias (search for similar items in EconPapers)
JEL-codes: E44 G10 O40 P43 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2024-04
New Economics Papers: this item is included in nep-ban and nep-fdg
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