Table 4. Open in new tab Estimation...

	Financial development index below the median	Financial development index above the median
${(I / K)}_{t - 1}$	0.295^***	0.283^***	0.294^***	0.310^***	0.307^***	0.301^***	0.440^***	0.432^***	0.437^***	0.443^***	0.430^***	0.420^***
	(0.042)	(0.041)	(0.039)	(0.040)	(0.042)	(0.041)	(0.028)	(0.029)	(0.029)	(0.029)	(0.034)	(0.040)
${(S / K)}_{t - 1}$	0.282^***	0.291^***	0.244^***	0.229^**	0.281^***	0.268^***	0.411^***	0.421^***	0.427^***	0.404^***	0.378^***	0.396^***
	(0.084)	(0.085)	(0.089)	(0.091)	(0.082)	(0.080)	(0.053)	(0.053)	(0.055)	(0.056)	(0.058)	(0.065)
${(π / K)}_{t - 1}$	0.021	0.024	0.025	0.026	0.020	0.023	0.021	0.018	0.021	0.020	0.023	0.029
	(0.022)	(0.022)	(0.021)	(0.021)	(0.021)	(0.022)	(0.016)	(0.016)	(0.016)	(0.016)	(0.015)	(0.019)
${(F / K)}_{t - 1}$	−0.069	−0.078	−0.078	−0.094^**	−0.067	−0.069^*	−0.067^***	−0.061^**	−0.069^***	−0.068^***	−0.068^***	−0.073^**
	(0.047)	(0.049)	(0.049)	(0.048)	(0.044)	(0.042)	(0.025)	(0.027)	(0.026)	(0.025)	(0.026)	(0.032)
${(π_{F} / K)}_{t - 1}$	−0.034	−0.023	0.034	0.219^**	0.350^**	0.645^**	−0.005	−0.024	−0.026	0.085	0.328^***	1.262
	(0.035)	(0.042)	(0.052)	(0.086)	(0.160)	(0.277)	(0.022)	(0.030)	(0.049)	(0.059)	(0.124)	(0.907)
${(π_{F} / K)}_{t - 1} * D_{n}$		−0.022	−0.184^*	−0.398^***	−0.467^**	−0.724^**		0.765	0.108	−0.188	−0.437^***	−1.373
		(0.089)	(0.105)	(0.124)	(0.190)	(0.295)		(0.740)	(0.224)	(0.122)	(0.161)	(0.975)
${(T D / T A)}_{t - 1}$	−0.027	−0.030	−0.032	−0.035	−0.043^*	−0.028	−0.070^***	−0.067^***	−0.068^***	−0.074^***	−0.065^***	−0.066^***
	(0.029)	(0.029)	(0.030)	(0.027)	(0.026)	(0.030)	(0.014)	(0.014)	(0.014)	(0.014)	(0.013)	(0.014)
Number of observations	6,436	6,436	6,436	6,436	6,436	6,436	21,449	21,449	21,449	21,449	21,449	21,449
Number of firms	767	767	767	767	767	767	2,953	2,953	2,953	2,953	2,953	2,953
Average number of observations	8.4	8.4	8.4	8.4	8.4	8.4	7.3	7.3	7.3	7.3	7.3	7.3
Number of instruments	31	33	33	33	33	33	31	33	33	33	33	33
p-value Hanses test	0.514	0.531	0.618	0.476	0.545	0.638	0.044	0.123	0.036	0.019	0.112	0.222
p-value A-B test (AR1)	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
p-value A-B test (AR2)	0.838	0.837	0.918	0.729	0.744	0.855	0.426	0.682	0.502	0.421	0.485	0.918
Time effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Wald test for time effects (p-value)	0.002	0.001	0.000	0.005	0.001	0.000	0.010	0.008	0.009	0.012	0.004	0.003
p-value $(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}$		0.514	0.058	0.005	0.022	0.057		0.304	0.650		0.026	0.144

Financial development index below the median

Financial development index above the median

(I)

(II)

(III)

(IV)

(V)

(VI)

(VII)

(VIII)

(IX)

(X)

(XI)

(XII)

TOT

TA10

TA25

TA50

TA75

TA90

TOT

TA10

TA25

TA50

TA75

TA90

{(I / K)}_{t - 1}

0.295^***

0.283^***

0.294^***

0.310^***

0.307^***

0.301^***

0.440^***

0.432^***

0.437^***

0.443^***

0.430^***

0.420^***

(0.042)

(0.041)

(0.039)

(0.040)

(0.042)

(0.041)

(0.028)

(0.029)

(0.034)

(0.040)

{(S / K)}_{t - 1}

0.282^***

0.291^***

0.244^***

0.229^**

0.281^***

0.268^***

0.411^***

0.421^***

0.427^***

0.404^***

0.378^***

0.396^***

(0.084)

(0.085)

(0.089)

(0.091)

(0.082)

(0.080)

(0.053)

(0.055)

(0.056)

(0.058)

(0.065)

{(π / K)}_{t - 1}

0.021

0.024

0.025

0.026

0.020

0.023

0.021

0.018

0.021

0.020

0.023

0.029

(0.022)

(0.021)

(0.022)

(0.016)

(0.015)

(0.019)

{(F / K)}_{t - 1}

−0.069

−0.078

−0.094^**

−0.067

−0.069^*

−0.067^***

−0.061^**

−0.069^***

−0.068^***

−0.073^**

(0.047)

(0.049)

(0.048)

(0.044)

(0.042)

(0.025)

(0.027)

(0.026)

(0.025)

(0.026)

(0.032)

{(π_{F} / K)}_{t - 1}

−0.034

−0.023

0.034

0.219^**

0.350^**

0.645^**

−0.005

−0.024

−0.026

0.085

0.328^***

1.262

(0.035)

(0.042)

(0.052)

(0.086)

(0.160)

(0.277)

(0.022)

(0.030)

(0.049)

(0.059)

(0.124)

(0.907)

{(π_{F} / K)}_{t - 1} * D_{n}

−0.022

−0.184^*

−0.398^***

−0.467^**

−0.724^**

0.765

0.108

−0.188

−0.437^***

−1.373

(0.089)

(0.105)

(0.124)

(0.190)

(0.295)

(0.740)

(0.224)

(0.122)

(0.161)

(0.975)

{(T D / T A)}_{t - 1}

−0.027

−0.030

−0.032

−0.035

−0.043^*

−0.028

−0.070^***

−0.067^***

−0.068^***

−0.074^***

−0.065^***

−0.066^***

(0.029)

(0.030)

(0.027)

(0.026)

(0.030)

(0.014)

(0.013)

(0.014)

Number of observations

6,436

21,449

Number of firms

767

2,953

Average number of observations

8.4

7.3

Number of instruments

p-value Hanses test

0.514

0.531

0.618

0.476

0.545

0.638

0.044

0.123

0.036

0.019

0.112

0.222

p-value A-B test (AR1)

0.000

p-value A-B test (AR2)

0.838

0.837

0.918

0.729

0.744

0.855

0.426

0.682

0.502

0.421

0.485

0.918

Time effects

Yes

Wald test for time effects (p-value)

0.002

0.001

0.000

0.005

0.001

0.000

0.010

0.008

0.009

0.012

0.004

0.003

p-value

(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}

0.514

0.058

0.005

0.022

0.057

0.304

0.650

0.026

0.144

	Financial development index below the median	Financial development index above the median
${(I / K)}_{t - 1}$	0.295^***	0.283^***	0.294^***	0.310^***	0.307^***	0.301^***	0.440^***	0.432^***	0.437^***	0.443^***	0.430^***	0.420^***
	(0.042)	(0.041)	(0.039)	(0.040)	(0.042)	(0.041)	(0.028)	(0.029)	(0.029)	(0.029)	(0.034)	(0.040)
${(S / K)}_{t - 1}$	0.282^***	0.291^***	0.244^***	0.229^**	0.281^***	0.268^***	0.411^***	0.421^***	0.427^***	0.404^***	0.378^***	0.396^***
	(0.084)	(0.085)	(0.089)	(0.091)	(0.082)	(0.080)	(0.053)	(0.053)	(0.055)	(0.056)	(0.058)	(0.065)
${(π / K)}_{t - 1}$	0.021	0.024	0.025	0.026	0.020	0.023	0.021	0.018	0.021	0.020	0.023	0.029
	(0.022)	(0.022)	(0.021)	(0.021)	(0.021)	(0.022)	(0.016)	(0.016)	(0.016)	(0.016)	(0.015)	(0.019)
${(F / K)}_{t - 1}$	−0.069	−0.078	−0.078	−0.094^**	−0.067	−0.069^*	−0.067^***	−0.061^**	−0.069^***	−0.068^***	−0.068^***	−0.073^**
	(0.047)	(0.049)	(0.049)	(0.048)	(0.044)	(0.042)	(0.025)	(0.027)	(0.026)	(0.025)	(0.026)	(0.032)
${(π_{F} / K)}_{t - 1}$	−0.034	−0.023	0.034	0.219^**	0.350^**	0.645^**	−0.005	−0.024	−0.026	0.085	0.328^***	1.262
	(0.035)	(0.042)	(0.052)	(0.086)	(0.160)	(0.277)	(0.022)	(0.030)	(0.049)	(0.059)	(0.124)	(0.907)
${(π_{F} / K)}_{t - 1} * D_{n}$		−0.022	−0.184^*	−0.398^***	−0.467^**	−0.724^**		0.765	0.108	−0.188	−0.437^***	−1.373
		(0.089)	(0.105)	(0.124)	(0.190)	(0.295)		(0.740)	(0.224)	(0.122)	(0.161)	(0.975)
${(T D / T A)}_{t - 1}$	−0.027	−0.030	−0.032	−0.035	−0.043^*	−0.028	−0.070^***	−0.067^***	−0.068^***	−0.074^***	−0.065^***	−0.066^***
	(0.029)	(0.029)	(0.030)	(0.027)	(0.026)	(0.030)	(0.014)	(0.014)	(0.014)	(0.014)	(0.013)	(0.014)
Number of observations	6,436	6,436	6,436	6,436	6,436	6,436	21,449	21,449	21,449	21,449	21,449	21,449
Number of firms	767	767	767	767	767	767	2,953	2,953	2,953	2,953	2,953	2,953
Average number of observations	8.4	8.4	8.4	8.4	8.4	8.4	7.3	7.3	7.3	7.3	7.3	7.3
Number of instruments	31	33	33	33	33	33	31	33	33	33	33	33
p-value Hanses test	0.514	0.531	0.618	0.476	0.545	0.638	0.044	0.123	0.036	0.019	0.112	0.222
p-value A-B test (AR1)	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
p-value A-B test (AR2)	0.838	0.837	0.918	0.729	0.744	0.855	0.426	0.682	0.502	0.421	0.485	0.918
Time effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Wald test for time effects (p-value)	0.002	0.001	0.000	0.005	0.001	0.000	0.010	0.008	0.009	0.012	0.004	0.003
p-value $(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}$		0.514	0.058	0.005	0.022	0.057		0.304	0.650		0.026	0.144

Financial development index below the median

Financial development index above the median

(I)

(II)

(III)

(IV)

(V)

(VI)

(VII)

(VIII)

(IX)

(X)

(XI)

(XII)

TOT

TA10

TA25

TA50

TA75

TA90

TOT

TA10

TA25

TA50

TA75

TA90

{(I / K)}_{t - 1}

0.295^***

0.283^***

0.294^***

0.310^***

0.307^***

0.301^***

0.440^***

0.432^***

0.437^***

0.443^***

0.430^***

0.420^***

(0.042)

(0.041)

(0.039)

(0.040)

(0.042)

(0.041)

(0.028)

(0.029)

(0.034)

(0.040)

{(S / K)}_{t - 1}

0.282^***

0.291^***

0.244^***

0.229^**

0.281^***

0.268^***

0.411^***

0.421^***

0.427^***

0.404^***

0.378^***

0.396^***

(0.084)

(0.085)

(0.089)

(0.091)

(0.082)

(0.080)

(0.053)

(0.055)

(0.056)

(0.058)

(0.065)

{(π / K)}_{t - 1}

0.021

0.024

0.025

0.026

0.020

0.023

0.021

0.018

0.021

0.020

0.023

0.029

(0.022)

(0.021)

(0.022)

(0.016)

(0.015)

(0.019)

{(F / K)}_{t - 1}

−0.069

−0.078

−0.094^**

−0.067

−0.069^*

−0.067^***

−0.061^**

−0.069^***

−0.068^***

−0.073^**

(0.047)

(0.049)

(0.048)

(0.044)

(0.042)

(0.025)

(0.027)

(0.026)

(0.025)

(0.026)

(0.032)

{(π_{F} / K)}_{t - 1}

−0.034

−0.023

0.034

0.219^**

0.350^**

0.645^**

−0.005

−0.024

−0.026

0.085

0.328^***

1.262

(0.035)

(0.042)

(0.052)

(0.086)

(0.160)

(0.277)

(0.022)

(0.030)

(0.049)

(0.059)

(0.124)

(0.907)

{(π_{F} / K)}_{t - 1} * D_{n}

−0.022

−0.184^*

−0.398^***

−0.467^**

−0.724^**

0.765

0.108

−0.188

−0.437^***

−1.373

(0.089)

(0.105)

(0.124)

(0.190)

(0.295)

(0.740)

(0.224)

(0.122)

(0.161)

(0.975)

{(T D / T A)}_{t - 1}

−0.027

−0.030

−0.032

−0.035

−0.043^*

−0.028

−0.070^***

−0.067^***

−0.068^***

−0.074^***

−0.065^***

−0.066^***

(0.029)

(0.030)

(0.027)

(0.026)

(0.030)

(0.014)

(0.013)

(0.014)

Number of observations

6,436

21,449

Number of firms

767

2,953

Average number of observations

8.4

7.3

Number of instruments

p-value Hanses test

0.514

0.531

0.618

0.476

0.545

0.638

0.044

0.123

0.036

0.019

0.112

0.222

p-value A-B test (AR1)

0.000

p-value A-B test (AR2)

0.838

0.837

0.918

0.729

0.744

0.855

0.426

0.682

0.502

0.421

0.485

0.918

Time effects

Yes

Wald test for time effects (p-value)

0.002

0.001

0.000

0.005

0.001

0.000

0.010

0.008

0.009

0.012

0.004

0.003

p-value

(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}

0.514

0.058

0.005

0.022

0.057

0.304

0.650

0.026

0.144

Table 4.

Open in new tab

Estimation results, full sample, 1995–2015, financial development index median split, dependent variable (I/K)_t

	Financial development index below the median						Financial development index above the median
	(I)	(II)	(III)	(IV)	(V)	(VI)	(VII)	(VIII)	(IX)	(X)	(XI)	(XII)
	TOT	TA10	TA25	TA50	TA75	TA90	TOT	TA10	TA25	TA50	TA75	TA90
${(I / K)}_{t - 1}$	0.295^***	0.283^***	0.294^***	0.310^***	0.307^***	0.301^***	0.440^***	0.432^***	0.437^***	0.443^***	0.430^***	0.420^***
	(0.042)	(0.041)	(0.039)	(0.040)	(0.042)	(0.041)	(0.028)	(0.029)	(0.029)	(0.029)	(0.034)	(0.040)
${(S / K)}_{t - 1}$	0.282^***	0.291^***	0.244^***	0.229^**	0.281^***	0.268^***	0.411^***	0.421^***	0.427^***	0.404^***	0.378^***	0.396^***
	(0.084)	(0.085)	(0.089)	(0.091)	(0.082)	(0.080)	(0.053)	(0.053)	(0.055)	(0.056)	(0.058)	(0.065)
${(π / K)}_{t - 1}$	0.021	0.024	0.025	0.026	0.020	0.023	0.021	0.018	0.021	0.020	0.023	0.029
	(0.022)	(0.022)	(0.021)	(0.021)	(0.021)	(0.022)	(0.016)	(0.016)	(0.016)	(0.016)	(0.015)	(0.019)
${(F / K)}_{t - 1}$	−0.069	−0.078	−0.078	−0.094^**	−0.067	−0.069^*	−0.067^***	−0.061^**	−0.069^***	−0.068^***	−0.068^***	−0.073^**
	(0.047)	(0.049)	(0.049)	(0.048)	(0.044)	(0.042)	(0.025)	(0.027)	(0.026)	(0.025)	(0.026)	(0.032)
${(π_{F} / K)}_{t - 1}$	−0.034	−0.023	0.034	0.219^**	0.350^**	0.645^**	−0.005	−0.024	−0.026	0.085	0.328^***	1.262
	(0.035)	(0.042)	(0.052)	(0.086)	(0.160)	(0.277)	(0.022)	(0.030)	(0.049)	(0.059)	(0.124)	(0.907)
${(π_{F} / K)}_{t - 1} * D_{n}$		−0.022	−0.184^*	−0.398^***	−0.467^**	−0.724^**		0.765	0.108	−0.188	−0.437^***	−1.373
		(0.089)	(0.105)	(0.124)	(0.190)	(0.295)		(0.740)	(0.224)	(0.122)	(0.161)	(0.975)
${(T D / T A)}_{t - 1}$	−0.027	−0.030	−0.032	−0.035	−0.043^*	−0.028	−0.070^***	−0.067^***	−0.068^***	−0.074^***	−0.065^***	−0.066^***
	(0.029)	(0.029)	(0.030)	(0.027)	(0.026)	(0.030)	(0.014)	(0.014)	(0.014)	(0.014)	(0.013)	(0.014)
Number of observations	6,436	6,436	6,436	6,436	6,436	6,436	21,449	21,449	21,449	21,449	21,449	21,449
Number of firms	767	767	767	767	767	767	2,953	2,953	2,953	2,953	2,953	2,953
Average number of observations	8.4	8.4	8.4	8.4	8.4	8.4	7.3	7.3	7.3	7.3	7.3	7.3
Number of instruments	31	33	33	33	33	33	31	33	33	33	33	33
p-value Hanses test	0.514	0.531	0.618	0.476	0.545	0.638	0.044	0.123	0.036	0.019	0.112	0.222
p-value A-B test (AR1)	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
p-value A-B test (AR2)	0.838	0.837	0.918	0.729	0.744	0.855	0.426	0.682	0.502	0.421	0.485	0.918
Time effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Wald test for time effects (p-value)	0.002	0.001	0.000	0.005	0.001	0.000	0.010	0.008	0.009	0.012	0.004	0.003
p-value $(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}$		0.514	0.058	0.005	0.022	0.057		0.304	0.650		0.026	0.144

	Financial development index below the median						Financial development index above the median
	(I)	(II)	(III)	(IV)	(V)	(VI)	(VII)	(VIII)	(IX)	(X)	(XI)	(XII)
	TOT	TA10	TA25	TA50	TA75	TA90	TOT	TA10	TA25	TA50	TA75	TA90
${(I / K)}_{t - 1}$	0.295^***	0.283^***	0.294^***	0.310^***	0.307^***	0.301^***	0.440^***	0.432^***	0.437^***	0.443^***	0.430^***	0.420^***
	(0.042)	(0.041)	(0.039)	(0.040)	(0.042)	(0.041)	(0.028)	(0.029)	(0.029)	(0.029)	(0.034)	(0.040)
${(S / K)}_{t - 1}$	0.282^***	0.291^***	0.244^***	0.229^**	0.281^***	0.268^***	0.411^***	0.421^***	0.427^***	0.404^***	0.378^***	0.396^***
	(0.084)	(0.085)	(0.089)	(0.091)	(0.082)	(0.080)	(0.053)	(0.053)	(0.055)	(0.056)	(0.058)	(0.065)
${(π / K)}_{t - 1}$	0.021	0.024	0.025	0.026	0.020	0.023	0.021	0.018	0.021	0.020	0.023	0.029
	(0.022)	(0.022)	(0.021)	(0.021)	(0.021)	(0.022)	(0.016)	(0.016)	(0.016)	(0.016)	(0.015)	(0.019)
${(F / K)}_{t - 1}$	−0.069	−0.078	−0.078	−0.094^**	−0.067	−0.069^*	−0.067^***	−0.061^**	−0.069^***	−0.068^***	−0.068^***	−0.073^**
	(0.047)	(0.049)	(0.049)	(0.048)	(0.044)	(0.042)	(0.025)	(0.027)	(0.026)	(0.025)	(0.026)	(0.032)
${(π_{F} / K)}_{t - 1}$	−0.034	−0.023	0.034	0.219^**	0.350^**	0.645^**	−0.005	−0.024	−0.026	0.085	0.328^***	1.262
	(0.035)	(0.042)	(0.052)	(0.086)	(0.160)	(0.277)	(0.022)	(0.030)	(0.049)	(0.059)	(0.124)	(0.907)
${(π_{F} / K)}_{t - 1} * D_{n}$		−0.022	−0.184^*	−0.398^***	−0.467^**	−0.724^**		0.765	0.108	−0.188	−0.437^***	−1.373
		(0.089)	(0.105)	(0.124)	(0.190)	(0.295)		(0.740)	(0.224)	(0.122)	(0.161)	(0.975)
${(T D / T A)}_{t - 1}$	−0.027	−0.030	−0.032	−0.035	−0.043^*	−0.028	−0.070^***	−0.067^***	−0.068^***	−0.074^***	−0.065^***	−0.066^***
	(0.029)	(0.029)	(0.030)	(0.027)	(0.026)	(0.030)	(0.014)	(0.014)	(0.014)	(0.014)	(0.013)	(0.014)
Number of observations	6,436	6,436	6,436	6,436	6,436	6,436	21,449	21,449	21,449	21,449	21,449	21,449
Number of firms	767	767	767	767	767	767	2,953	2,953	2,953	2,953	2,953	2,953
Average number of observations	8.4	8.4	8.4	8.4	8.4	8.4	7.3	7.3	7.3	7.3	7.3	7.3
Number of instruments	31	33	33	33	33	33	31	33	33	33	33	33
p-value Hanses test	0.514	0.531	0.618	0.476	0.545	0.638	0.044	0.123	0.036	0.019	0.112	0.222
p-value A-B test (AR1)	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000	0.000
p-value A-B test (AR2)	0.838	0.837	0.918	0.729	0.744	0.855	0.426	0.682	0.502	0.421	0.485	0.918
Time effects	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes	Yes
Wald test for time effects (p-value)	0.002	0.001	0.000	0.005	0.001	0.000	0.010	0.008	0.009	0.012	0.004	0.003
p-value $(π_{F} / K) + {(π_{F} / K)}_{t - 1} * D_{n}$		0.514	0.058	0.005	0.022	0.057		0.304	0.650		0.026	0.144

Notes: Weighted regressions (w=1/total country obs.), two-step difference-GMM estimations. Specifications I and VII are based on equation (1) and specifications II–VI and VIII–XII based on equation (2). Coefficients for the year dummies are not reported. Robust corrected standard error in parenthesis.

Significant at 10%.

Significant at 5%.

Significant at 1%.

Source: Authors’ computations based on Worldscope data.

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