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Financial Development and Economic Growth: A Meta-Analysis

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  • Petra Valickova

    ()

  • Tomas Havranek

    ()

  • Roman Horvath

    ()

Abstract

We analyze 1334 estimates from 67 studies that examine the effect of financial development on economic growth. Taken together, the studies imply a positive and statistically significant effect, but individual estimates vary a lot. We find that both research design and heterogeneity in the underlying effect play a role in explaining the differences in results. Studies that do not address endogeneity tend to overstate the effect of finance on growth. The effect seems to be weaker in poor countries, but it decreases worldwide after the 1980s. Our results suggest that stock markets support faster economic growth than other financial intermediaries. We find no evidence of publication bias in the literature.

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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp1045.

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Length: pages
Date of creation: 15 Mar 2013
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Handle: RePEc:wdi:papers:2013-1045

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Keywords: finance; development; growth; meta-analysis;

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Cited by:
  1. Strieborny , Martin & Kukenova, Madina, 2013. "Investment in Relationship-Specific Assets: Does Finance Matter?," Knut Wicksell Working Paper Series 2013/10, Knut Wicksell Centre for Financial Studies, Lund University.
  2. Kamil Galuscak & Adam Gersl & Marcela Gronychova & Petr Hlavac & Petr Jakubik & Lubos Komarek & Zlatuse Komarkova & Tomas Konecny & Jakub Seidler, 2014. "Stress-Testing Analyses of the Czech Financial System," Occasional Publications - Edited Volumes, Czech National Bank, Research Department, edition 1, volume 12, number rb12/1 edited by Jan Babecky & Roman Horvath, August.

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