Growth and Finance
AbstractI review selectively some of the trends in research on the relationships between financial markets and economic growth. Economic theory provides many arguments as to why, given the widespread existence of moral hazard and adverse selection problems in financial transactions, more highly developed financial markets might facilitate faster economic growth. However, it is less clear that summary measures of financial development and structure, widely used in empirical research, are adequate. I review some recent empirical work in this area, and show that apparent effects of financial development on growth may be capturing regional differences, and other factors. There appears to be little empirical support for an effect of financial structure on growth. Much empirical work in this field uses data over short periods of time, of a few decades in length. Looking over longer periods, non-financial forces of increasing returns in production, increasing returns to agglomeration and falling transport costs appear more important, and the potential role of financial markets rather less. The question of whether finance plays a causal role or merely follows economic development remains an open one. Copyright Blackwell Publishing Ltd and The Victoria University of Manchester, 2003.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by University of Manchester in its journal The Manchester School.
Volume (Year): 71 (2003)
Issue (Month): 4 (07)
Contact details of provider:
Postal: Manchester M13 9PL
Phone: (0)161 275 4868
Fax: (0)161 275 4812
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1463-6786
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bencivenga, Valerie R & Smith, Bruce D, 1991.
"Financial Intermediation and Endogenous Growth,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 195-209, April.
- Levine, Ross, 1996.
"Financial development and economic growth : views and agenda,"
Policy Research Working Paper Series
1678, The World Bank.
- Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
- Owen, Ann L. & Weil, David N., 1998.
"Intergenerational earnings mobility, inequality and growth,"
Journal of Monetary Economics,
Elsevier, vol. 41(1), pages 71-104, February.
- Ann L. Owen & David N. Weil, 1997. "Intergenerational Earnings Mobility, Inequality, and Growth," NBER Working Papers 6070, National Bureau of Economic Research, Inc.
- Bernanke, Ben & Gertler, Mark, 1989. "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review, American Economic Association, vol. 79(1), pages 14-31, March.
- King, Robert G & Levine, Ross, 1993.
"Finance and Growth: Schumpeter Might Be Right,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(3), pages 717-37, August.
- Galor, Oded & Zeira, Joseph, 1993.
"Income Distribution and Macroeconomics,"
Review of Economic Studies,
Wiley Blackwell, vol. 60(1), pages 35-52, January.
- Bencivenga, Valerie R. & Smith, Bruce D., 1993.
"Some consequences of credit rationing in an endogenous growth model,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 17(1-2), pages 97-122.
- Bencivenga, V.R. & Smith, B.D., 1988. "Some Consequences Of Credit Rationing In An Endogenous Growth Model," RCER Working Papers 159, University of Rochester - Center for Economic Research (RCER).
- Hicks, J. R., 1969. "A Theory of Economic History," OUP Catalogue, Oxford University Press, number 9780198811633.
- De Gregorio, Jose, 1996. "Borrowing constraints, human capital accumulation, and growth," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 49-71, February.
- Piketty, Thomas, 1997. "The Dynamics of the Wealth Distribution and the Interest Rate with Credit Rationing," Review of Economic Studies, Wiley Blackwell, vol. 64(2), pages 173-89, April.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus The Coasians," The Quarterly Journal of Economics, MIT Press, vol. 116(3), pages 853-899, August.
- Bruce Greenwald & Joseph E. Stiglitz, 1993. "New and Old Keynesians," Journal of Economic Perspectives, American Economic Association, vol. 7(1), pages 23-44, Winter.
- Trew, Alex, 2008.
"Efficiency, depth and growth: Quantitative implications of finance and growth theory,"
Journal of Macroeconomics,
Elsevier, vol. 30(4), pages 1550-1568, December.
- Alex Trew, 2007. "Efficiency, Depth and Growth: Quantitative Implications of Finance and Growth Theory," CDMA Working Paper Series 200712, Centre for Dynamic Macroeconomic Analysis.
- James B. Ang, 2007.
"A Survey Of Recent Developments In The Literature Of Finance And Growth,"
Monash Economics Working Papers
03-07, Monash University, Department of Economics.
- James B. Ang, 2008. "A Survey Of Recent Developments In The Literature Of Finance And Growth," Journal of Economic Surveys, Wiley Blackwell, vol. 22(3), pages 536-576, 07.
- Max Gillman & Michal Kejak, 2007. " Inflation, Financial Development and Human Capital-Based Endogenous Growth: an Explanation of Ten Empirical Findings," CDMA Conference Paper Series 0703, Centre for Dynamic Macroeconomic Analysis.
- Alex Trew, 2005.
"Finance and Growth: A Critical Survey,"
CDMA Working Paper Series
200507, Centre for Dynamic Macroeconomic Analysis, revised 15 Apr 2006.
- Franz R. Hahn, 2005.
"Finance-Growth Nexus and the P-bias: Evidence from OECD Countries,"
Banca Monte dei Paschi di Siena SpA, vol. 34(1), pages 113-126, 02.
- Franz R. Hahn, 2004. "Finance-Growth Nexus and the P-Bias. Evidence from OECD Countries," WIFO Working Papers 223, WIFO.
- K Blackburn & D Varvarigos, 2005. "Growth, Uncertainty and Finance," Centre for Growth and Business Cycle Research Discussion Paper Series 48, Economics, The Univeristy of Manchester.
- Dimitrios Varvarigos & Keith Blackburn, 2005. "Growth, Uncertainty and Finance," Money Macro and Finance (MMF) Research Group Conference 2005 12, Money Macro and Finance Research Group.
- Colin Kirkpatrick, 2005. "Finance and Development: Overview and Introduction," Journal of Development Studies, Taylor & Francis Journals, vol. 41(4), pages 631-635.
- Mark A Roberts, . "The conflating effects of education and financial competition in an OLG growth model with Nelson-Phelps human capital," Discussion Papers 12/07, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.