Content №1 от 2018
Non-Monotonic Impact of Financial Development on Economic Dynamics in the Russian Regions
The article uses the methods of the endogenous growth theory to study the relationship between financial development and economic dynamics at the national and subnational levels. It identifies the regularities in the dependence of the parameters values for the regional growth models on the class of regions. We categorize the regions according to how developed the level of banking intermediation is. The regions are grouped by the composite banking services density index (following the methodology by the Bank of Russia). Having analyzed the panel data on 75 regions of the Russian Federation between 2002 and 2014, we found evidence in favor of greater elasticity of regional GDP on the banking intermediation indicators in the groups of regions with the medium level of financial development. Thus, we do not reject a hypothesis for the non-monotonic relation between finance and growth among different groups of Russian regions. For regional studies in Russia focused on the issue of economic development factors, this means a need to increase attention to the development of nonpublic sectors of the regional financial systems. Another consequence is that the search for convergence mechanisms should be oriented towards the institutions providing financial development.
