Importance The paper develops the area of endogenous economic growth theory that focuses on the relationships between financial development and economic dynamics at the national and sub-national levels. Objectives The study aims to identify regular differences in the level and statistical significance of the coefficients of regression models with financial development variables for groups of regions with different levels of financial sector development averaged for the studied period. Methods To estimate coefficients, we use an individual fixed-effect model. Regions are classified in terms of the composite index of density of banking services in the region. We use real GRP per capita as an indicator of economic dynamics. The analysis covers the panel data on 75 Russian regions for the period of 2002–2014. Results We found that the impact of financial development indices on economic growth is more intensive in groups of regions with a moderate level of financial development. Conclusions and Relevance The findings support the hypothesis on nonmonotonic dependence of finance and growth among different groups of Russian regions.
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