Does Financial Deepening Predict Manufacturing Growth? Evidence from a Lagged Panel Fixed-Effects Analysis of 158 Economies, 1990–2024
DOI:
https://doi.org/10.65166/mf8e1150关键词:
financial deepening, private-sector credit, manufacturing value added, panel data, fixed effects, World Development Indicators, industrial development摘要
This study examines whether domestic credit to the private sector, measured as a percentage of gross domestic product, is associated with manufacturing value-added growth in the subsequent year. Using an archived World Development Indicators dataset, an unbalanced panel of 3,496 annual observations across 158 economies over 1990–2024 is estimated with country and year fixed effects. The explanatory variable and four macroeconomic controls—foreign direct investment, trade openness, consumer-price inflation, and gross capital formation—are lagged one year. The main model yields a negative coefficient on private-sector credit depth (β = −0.0298; country-clustered p = 0.0023), equivalent to approximately 0.30 percentage point lower subsequent manufacturing growth for a 10-percentage-point higher credit-to-GDP ratio, conditional on the specified controls and fixed effects. This association persists in several outlier and sample checks. Exploratory interactions suggest that the negative association is less pronounced after 2010 (difference = +0.0303; p = 0.0101), whereas interaction tests at 2005 and 2008 do not establish significant changes. A quadratic specification indicates a possible U-shaped pattern, but its high-credit turning point is weakly supported by the available observations. The findings caution against equating economy-wide credit depth with productive credit reaching manufacturing firms. Because the design does not identify a causal effect or observe sectoral credit allocation, the results support a conditional association rather than a claim that credit expansion reduces industrial growth.
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