Importance The paper develops the area of endogenous economic growth theory that focuses on the relationships between financial development and economic dynamics at the national and sub-national levels. Objectives The study aims to identify regular differences in the level and statistical significance of the coefficients of regression models with financial development variables for groups of regions with different levels of financial sector development averaged for the studied period. Methods To estimate coefficients, we use an individual fixed-effect model. Regions are classified in terms of the composite index of density of banking services in the region. We use real GRP per capita as an indicator of economic dynamics. The analysis covers the panel data on 75 Russian regions for the period of 2002–2014. Results We found that the impact of financial development indices on economic growth is more intensive in groups of regions with a moderate level of financial development. Conclusions and Relevance The findings support the hypothesis on nonmonotonic dependence of finance and growth among different groups of Russian regions.
Acemoglu D., Dell M. Productivity Differences Between and Within Countries. American Economic Journal: Macroeconomics, 2010, vol. 2, no. 1, pp. 169–188. doi: 10.3386/w15155
D'Costa S., Garcilazo E., Martins J.O. The Impact of Structural and Macroeconomic Factors on Regional Growth. OECD Regional Development Working Papers, 2013, no. 2013/11. OECD Publishing, Paris. URL: Link
Krugman P., Venables A.J. Integration, Specialization, and the Adjustment. European Economic Review, 1996, vol. 40, iss. 3-5, pp. 959–968. doi: 10.3386/w4559
Schumpeter J.A. Teoriya ekonomicheskogo razvitiya. Kapitalizm, sotsializm i demokratiya [Capitalism, Socialism and Democracy]. Moscow, Eksmo Publ., 2007, 864 p.
Hicks J. A Theory of Economic History. Oxford, Clarendon Press, 1969, 181 p.
Goldsmith R.W. Financial Structure and Development. New Haven, Yale University Press, 1969, 561 p.
McKinnon R.I. Money and Capital in Economic Development. Washington DC, Brookings Institution, 1973, 184 p.
King R.G., Levine R. Financial Intermediation and Economic Development. In: Colin M., Xavier V. (Eds) Financial Intermediation in the Construction of Europe. London, Centre of Economic Policy Research, 1993, pp. 156–189.
King R.G., Levine R. Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 1993, vol. 108, no. 3, pp. 717–737.
King R.G., Levine R. Finance, Entrepreneurship, and Growth: Theory and Evidence. Journal of Monetary Economics, 1993, vol. 32, iss. 3, pp. 513–542.
Beck T., Levine R., Loayza N. Finance and the Sources of Growth. Journal of Financial Economics, 2000, vol. 58, iss. 1, 2, pp. 261–300. doi: 10.1016/S0304-405X(00)00072-6
Guiso L., Sapienza P., Zingales L. Does Local Financial Development Matter? The Quarterly Journal of Economics, 2004, vol. 119, iss. 3, pp. 929–969. doi: 10.1162/0033553041502162
Cheng X., Degryse H. The Impact of Bank and Non-Bank Financial Institutions on Local Economic Growth in China. Journal of Financial Services Research, 2010, vol. 37, no. 2, pp. 179–199. doi: 10.1007/s10693-009-0077-4
Kendall J. Local Financial Development and Growth. Journal of Banking and Finance, 2012, vol. 36, iss. 5, pp. 1548–1562. doi: 10.1016/j.jbankfin.2012.01.001
Zhang J., Wang L., Wang S. Financial Development and Economic Growth: Evidence from China. Journal of Comparative Economics, 2012, vol. 40, iss. 3, pp. 393–412. doi: 10.1016/j.jce.2012.01.001
Demetriades P., Hussien K. Does Financial Development Cause Economic Growth? Time Series Evidence from 16 Countries. Journal of Development Economics, 1996, vol. 51, iss. 2, pp. 387–411. doi: 10.1016/S0304-3878(96)00421-X
Rioja F., Valev N. Finance and the Sources of Growth at Various Stages of Economic Development. Economic Inquiry, 2004, vol. 42, iss. 1, pp. 127–140. doi: 10.1093/ei/cbh049
Odedokun M.O. Alternative Econometric Approaches for Analyzing the Role of the Financial Sector in Economic Growth: Time Series Evidence from LDC's. Journal of Development Economics, 1996, vol. 50, iss. 1, pp. 119–146. doi: 10.1016/0304-3878(96)00006-5
Levine R., Loayza N., Beck T. Financial Intermediation and Growth: Causality and Causes. Journal of Monetary Economics, 2000, vol. 46, iss. 1, pp. 31–77. doi: 10.1016/S0304-3932(00)00017-9
De Gregorio J., Guidotti P. Financial Development and Economic Growth. World Development, 1995, vol. 23, iss. 3, pp. 433–448. doi: 10.1016/0305-750X(94)00132-I
Rioja F., Valev N. Does One Size Fit All?: A Reexamination of the Finance and Growth Relationship. Journal of Development Economics, 2004, vol. 74, iss. 2, pp. 429–447. doi: 10.1016/j.jdeveco.2003.06.006
Krinichanskii K.V. [Financial Systems and Economic Development in the Russian Regions: A Comparative Analysis]. Voprosy Ekonomiki, 2015, no. 10, pp. 94–108. (In Russ.)
Berezinskaya O. [Lending to the non-financial sector: Opportunities and limitations]. Voprosy Ekonomiki, 2016, no. 3, pp. 63–74. (In Russ.)