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Seoul Journal of Economics - Vol. 34 , No. 3

[ Article ]
Seoul Journal of Economics - Vol. 34, No. 3, pp.405-450
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 31 Aug 2021
Received 21 Sep 2020 Revised 06 May 2021 Accepted 07 May 2021

Financialization, Financial Globalization, and Investment – Panel Cointegration Results Using OECD Data
Hochul Shin
Hochul Shin, Assistant Professor, Department of Economics, Hannam University, 70 Hannamro, Daedeok-Gu Daejeon 34430, Korea, Tel: +82 42-629-7627 (

JEL Classification: O16, F65, G15


This study analyzes the long-term effects of financialization and financial development on investment and growth by using data of OECD countries since the 1970s. The panel cointegration approach is adopted to investigate the long-run effects of these variables. Estimation results show evidence of cointegration among financial globalization, investment, and growth in the long run. Group means fully modified ordinary least squares results show that financial globalization is negatively correlated with private investment for fixed capital. Meanwhile, results of the panel vector error-correction model reveal a unilateral Granger causality from financial globalization to private investment. An inverted U-shape relationship between the new measure of financial development and investment or growth is also estimated similar to that found in recent literature.

Keywords: Financialization, Financial globalization, Financial development, Investment, Growth, Panel cointegration

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