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Inflation and Financial Depth

There is now a substantial theoretical literature arguing that inflation impedes financial deepening. Furthermore, it has been hypothesized that the relationship is a nonlinear one, in that there is a threshold level of inflation below which inflation has a positive effect on financial depth, but ab...

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Bibliographic Details
Main Author: Khan, Mohsin
Other Authors: Senhadji, Abdelhak, Smith, Bruce
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2001
Series:IMF Working Papers
Subjects:
Inflation
Stock Exchanges
Threshold Analysis
Finance
Market Capitalization
Deflation
Switching Regression Models
General Financial Markets: General (includes Measurement And Data)
Threshold Regression Models
Price Level
Stock Markets
Truncated And Censored Models
Financial Markets And The Macroeconomy
Financial Services Industry
Prices
Macroeconomics
Financial Sector Development
Econometrics
Econometrics & Economic Statistics
Finance: General
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
Description
Summary:There is now a substantial theoretical literature arguing that inflation impedes financial deepening. Furthermore, it has been hypothesized that the relationship is a nonlinear one, in that there is a threshold level of inflation below which inflation has a positive effect on financial depth, but above which the effect turns negative. Using a large cross-country sample, empirical support is found for the existence of such a threshold. The estimates indicate that the threshold level of inflation is generally between 3 and 6 percent a year, depending on the specific measure of financial depth that is used
Physical Description:31 pages
ISBN:9781451846416

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