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Financial Systems and Economic Growth: An Evaluation Framework for Policy

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Author Info
Iris Claus
Veronica Jacobsen
Brock Jera () (New Zealand Treasury)

Additional information is available for the following registered author(s):

Abstract

The purpose of this paper is to develop an analytical framework for discussing the link between financial systems and economic growth. Financial systems help overcome an information asymmetry between borrowers and lenders. If they do not function well, economic growth will be negatively affected. Three policy implications follow. First, the analysis underscores the importance of maintaining solid legal foundations because the financial system relies on these. Second, it demonstrates the necessity for reforming tax policy as it applies to investment, as this is demonstrated to significantly affect the operation of the financial system. Finally, given the importance of financial development for economic growth, a more in-depth review of New Zealand’s financial system in the context of financial regulation and supervision would be valuable.

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File URL: http://www.treasury.govt.nz/publications/research-policy/wp/2004/04-17/twp04-17.pdf
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Publisher Info
Paper provided by New Zealand Treasury in its series Treasury Working Paper Series with number 04/17.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 47 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:nzt:nztwps:04/17

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Postal: New Zealand Treasury, PO Box 3724, Wellington, New Zealand
Phone: +64-4-472 2733
Fax: +64-4-473 0982
Web page: http://www.treasury.govt.nz
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Related research
Keywords: Economic growth financial development financial systems financial regulation legal system institutions tax

Find related papers by JEL classification:
G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
G20 - Financial Economics - - Financial Institutions and Services - - - General
G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
K20 - Law and Economics - - Regulation and Business Law - - - General
K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment

This paper has been announced in the following NEP Reports:

References listed on IDEAS
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