Recovering the finance-growth nexus

Panicos O. Demetriades*, Johan Rewilak

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


We show that the finance-growth nexus can be recovered by using quality adjusted measures of financial development. Specifically, we utilize three World Bank financial fragility indicators – the Z-score, a measure of liquidity and a measure of impaired loans – to construct quality adjusted measures of private credit to GDP. Our findings suggest that the finance-growth nexus is alive and kicking, as long as banks use sound lending practices to prevent the buildup of non-performing loans. We also show that our results hold in Sub-Saharan Africa — a region where the finance-growth nexus could potentially make a big difference
Original languageEnglish
Article number109563
JournalEconomics Letters
Early online date9 Sept 2020
Publication statusPublished - 1 Nov 2020

Bibliographical note

© 2020, Elsevier. Licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International

Funding: Economic and Social Research Council, United Kingdom (award reference ES/N013344/2)


  • Credit
  • Financial development
  • Financial fragility
  • Financial resilience
  • Growth
  • Non-performing loans
  • Sub-Saharan Africa


Dive into the research topics of 'Recovering the finance-growth nexus'. Together they form a unique fingerprint.

Cite this