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The Role of Finance in Economic Development: Benefits, Risks, and Politics

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  • Beck, T.H.L.

    (Tilburg University, Center for Economic Research)

Abstract

Abstract: Theoretical and empirical research has shown that a sound and effective financial system is critical for economic development and growth. The financial system, however, is also subject to boom and bust cycles and fragility, with negative repercussions for the real economy. Further, the political structure of societies, often pre-determined by historic experience, is critical for the structure and development of the financial system. This paper is a critical survey of three related strands of literature – the finance and growth literature, the literature on financial fragility, and the politics and finance literature.

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2011-141.

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Date of creation: 2011
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Handle: RePEc:dgr:kubcen:2011141

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