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Financial Markets, Banks, and Growth : Disentangling the links

Author

Listed:
  • Alessandro Giovannini
  • Maurizio Iacopetta
  • Raoul Minetti

Abstract

The paper reviews the state of the economic literature on the link between financial development and growth. We first examine the issue of measurement of financial development and the debate on the direction of causality between finance and growth. Next, we extensively discuss the various channels through which the financial sector can affect growth, including the increase in the efficiency of capital allocation, the reduction in information costs, the improvement of risk management, and the support of innovation. The analysis is conducted referring both to the theoretical literature and to the most recent empirical findings. We conclude by drawing lessons for the current debate on the reform of the financial sector in the aftermath of the Great Recession.

Suggested Citation

  • Alessandro Giovannini & Maurizio Iacopetta & Raoul Minetti, 2013. "Financial Markets, Banks, and Growth : Disentangling the links," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(5), pages 105-147.
    • Handle: RePEc:cai:reofsp:reof_131_0105
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    Cited by:

    1. Giuseppe Arcuri & Marc Brunetto & Nadine Levratto, 2019. "Spatial patterns and determinants of firm exit: an empirical analysis on France," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 62(1), pages 99-118, February.
    2. Kalyan Chakraborty, 2020. "Development of financial market activities and economic growth: A cross-country evidence," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 60, pages 26-47.
    3. Giuseppe Arcuri & Nadine Levratto, 2017. "New firms’ bankruptcy: does local banking market matter?," Working Papers hal-04141638, HAL.
    4. Giuseppe Arcuri & Nadine Levratto, 2017. "New firms’ bankruptcy: does local banking market matter?," EconomiX Working Papers 2017-31, University of Paris Nanterre, EconomiX.
    5. David Jones & Corrado Di Maria & Simone Valente, 2021. "Financial Intermediation and Structural Change: Theory and Evidence," University of East Anglia School of Economics Working Paper Series 2021-06, School of Economics, University of East Anglia, Norwich, UK..
    6. Giuseppe Arcuri & Nadine Levratto, 2020. "Early stage SME bankruptcy: does the local banking market matter?," Small Business Economics, Springer, vol. 54(2), pages 421-436, February.
    7. Francesc Relano, 2023. "Ethical and Islamic Banking Compared from a Time-Based Perspective," Journal of Business Ethics, Springer, vol. 188(4), pages 795-805, December.
    8. Weal M.Gh. M. Arafat & Ihtisham ul Haq & Bahtiyar Mehmed & Azeem Abbas & Sisira Kumara Naradda Gamage & Oruj Gasimli, 2022. "The Causal Nexus among Energy Consumption, Environmental Degradation, Financial Development and Health Outcome: Empirical Study for Pakistan," Energies, MDPI, vol. 15(5), pages 1-20, March.

    More about this item

    Keywords

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    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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