economic growth in three Latin American countries and four Southeast Asian countries for the period 1980-2009. The study uses a balanced panel regression.
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Financial System
Functions 1. Facilitate exchange of goods and services 2. Facilitate risk management 3. Mobilize and pool resources 4. Collect and evaluate information to allocate capital Channels 1. Rate of physical capital accumulation 2. Productivity and efficiency of factors of production to make goods and services
Rate and level of economic growth
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m γ= γ¯ (1 − τ ) − ν λ γ m ν
1 m σ − 1 + + γ¯ (1 − τ ) λ λ γ¯ τ
λ σ
ν
σ
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γ¯
τ
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Yit =β0 + β1 Pit + β2 LIit + β3 Xit + β4 IN Fit + β5 GCit + β6 F Dit + β7 ST Kit + 'it i