Linking Financial Development and Total Factor Productivity of the Philippines

Calub, Renz Adrian (2011): Linking Financial Development and Total Factor Productivity of the Philippines.

Abstract

Financial development is said to have an impact on growth. In this paper we try to extend this notion to total factor productivity. As Bianchi [2010] noted, easing access to capital may encourage entrepreneurship and thus productivity. To test this relationship, we use Cororaton and Cuenca’s [2001] estimates of TFP and World Bank’s M3 to GDP (liquid liabilities to GDP) as a measure of financial depth. Estimates from our vector error correction model suggest that there is indeed a dynamic relationship between financial development and TFP.

• Item Type: MPRA Paper
• Language: English
• Keywords: Financial development, total factor productivity, VECM
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity

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