How financial development and fragility affect economic growth based on panel data of industrial countries using outlier analysis?

We empirically analysed the influence of financial development and fragility on economic growth based on outliers using 63 major industrial countries from 1988 to 2022. We simultaneously applied a model grounded in dynamic panel data based on fixed effects and the System Generalized Method of Moments (SYS-GMM) estimator to examine this issue, considering the SYS-GMM + least trimmed squares (LTS) estimator to identify outliers and mine their corresponding singular information in economics. The results provide that financial development has positive effect on economic growth when the influence of outliers is ignored. Nonetheless, financial development exhibits a very weakly positive influence on economic growth once the proposed SYS-GMM + LTS approach is adopted, implying that outliers are a matter of the financial development-growth nexus. Furthermore, banking crisis exerts a negative impact on economic growth both with and without the inclusion of outliers, whereas financial volatility changes from a feebly negative effect on economic growth without considering outliers to powerful negative effect on economic growth with considering outliers, and financial volatility has a more serious negative impact on economic growth than banking crisis, highlighting the current situation that financial fragility has greater damage to economic growth than before. In addition, we find that singular information contains crucial information such as financial crisis, political shocks, financial shocks, and economic reform.