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Finance and growth nexus: An international analysis across cities

Author

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  • Stefanos Ioannou

    (University of Oxford, UK)

  • Dariusz Wójcik

    (University of Oxford, UK)

Abstract

We examine the relationship between finance and economic growth in the metropolitan areas of 75 countries at various stages of economic development in the period 2001–2015. Our analysis demonstrates an inverted-U shaped relationship between finance and growth. This relationship becomes even more significant in the areas of a country outside its largest financial centre, indicating that while these areas can benefit from financial development, they are also the most vulnerable. We show that large financial centres can have an impact on growth across their national economies, but in doing so they complement rather than replace local financial centres. Overall, our results highlight the risks associated with the excesses of financial development and lend evidence to support calls for more decentralised financial systems.

Suggested Citation

  • Stefanos Ioannou & Dariusz Wójcik, 2021. "Finance and growth nexus: An international analysis across cities," Urban Studies, Urban Studies Journal Limited, vol. 58(1), pages 223-242, January.
    • Handle: RePEc:sae:urbstu:v:58:y:2021:i:1:p:223-242
    DOI: 10.1177/0042098019889244
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    References listed on IDEAS

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