Do integrated economies grow faster? evidence from domestic equity holdings
This paper aims to investigate the impact of financial integration on economic growth. Home bias, which is the tendency of over-investing in domestic stock bourse, is proposed as a proxy of advanced financial integration. The persistence of home bias reflects the existence of international friction....
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| Format: | Article |
| Language: | English |
| Published: |
Economics Bulletin
2017
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| Online Access: | http://psasir.upm.edu.my/id/eprint/61511/ http://psasir.upm.edu.my/id/eprint/61511/1/Do%20integrated%20economies%20grow%20faster%20evidence%20from%20domestic%20equity%20holdings.pdf |
| _version_ | 1848854426276593664 |
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| author | Lee, Pei Ling Chin, Lee Law, Siong Hook Saini, Azman |
| author_facet | Lee, Pei Ling Chin, Lee Law, Siong Hook Saini, Azman |
| author_sort | Lee, Pei Ling |
| building | UPM Institutional Repository |
| collection | Online Access |
| description | This paper aims to investigate the impact of financial integration on economic growth. Home bias, which is the tendency of over-investing in domestic stock bourse, is proposed as a proxy of advanced financial integration. The persistence of home bias reflects the existence of international friction. A high degree of home bias reflects imperfect integration of the national stock market with world capital markets and suggests a slower pace of economic expansion. Home bias is utilised, through its own lags, to address the reverse causality implied by potential endogeneity between home bias and real GDP growth. A dynamic GMM approach is employed to address the endogeneity and serial correlation concern. The results indicate the lagged real GDP per capita growth, home bias, government consumption, and variability in real effective exchange rates are found to explain cross-country variation in growth. |
| first_indexed | 2025-11-15T11:09:41Z |
| format | Article |
| id | upm-61511 |
| institution | Universiti Putra Malaysia |
| institution_category | Local University |
| language | English |
| last_indexed | 2025-11-15T11:09:41Z |
| publishDate | 2017 |
| publisher | Economics Bulletin |
| recordtype | eprints |
| repository_type | Digital Repository |
| spelling | upm-615112022-03-30T04:41:54Z http://psasir.upm.edu.my/id/eprint/61511/ Do integrated economies grow faster? evidence from domestic equity holdings Lee, Pei Ling Chin, Lee Law, Siong Hook Saini, Azman This paper aims to investigate the impact of financial integration on economic growth. Home bias, which is the tendency of over-investing in domestic stock bourse, is proposed as a proxy of advanced financial integration. The persistence of home bias reflects the existence of international friction. A high degree of home bias reflects imperfect integration of the national stock market with world capital markets and suggests a slower pace of economic expansion. Home bias is utilised, through its own lags, to address the reverse causality implied by potential endogeneity between home bias and real GDP growth. A dynamic GMM approach is employed to address the endogeneity and serial correlation concern. The results indicate the lagged real GDP per capita growth, home bias, government consumption, and variability in real effective exchange rates are found to explain cross-country variation in growth. Economics Bulletin 2017 Article PeerReviewed text en http://psasir.upm.edu.my/id/eprint/61511/1/Do%20integrated%20economies%20grow%20faster%20evidence%20from%20domestic%20equity%20holdings.pdf Lee, Pei Ling and Chin, Lee and Law, Siong Hook and Saini, Azman (2017) Do integrated economies grow faster? evidence from domestic equity holdings. Economics Bulletin, 37 (4). 2905 - 2916. ISSN 1545-2921 http://www.accessecon.com/pubs/eb/default.aspx?topic=Abstract&PaperID=EB-17-00557 |
| spellingShingle | Lee, Pei Ling Chin, Lee Law, Siong Hook Saini, Azman Do integrated economies grow faster? evidence from domestic equity holdings |
| title | Do integrated economies grow faster? evidence from domestic equity holdings |
| title_full | Do integrated economies grow faster? evidence from domestic equity holdings |
| title_fullStr | Do integrated economies grow faster? evidence from domestic equity holdings |
| title_full_unstemmed | Do integrated economies grow faster? evidence from domestic equity holdings |
| title_short | Do integrated economies grow faster? evidence from domestic equity holdings |
| title_sort | do integrated economies grow faster? evidence from domestic equity holdings |
| url | http://psasir.upm.edu.my/id/eprint/61511/ http://psasir.upm.edu.my/id/eprint/61511/ http://psasir.upm.edu.my/id/eprint/61511/1/Do%20integrated%20economies%20grow%20faster%20evidence%20from%20domestic%20equity%20holdings.pdf |