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Financial Markets, Banks, and Growth : Disentangling the links

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  • 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.

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  • 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 & Nadine Levratto, 2017. "New firms’ bankruptcy: does local banking market matter?," EconomiX Working Papers 2017-31, University of Paris Nanterre, EconomiX.
    2. repec:spr:anresc:v:62:y:2019:i:1:d:10.1007_s00168-018-0887-0 is not listed on IDEAS
    3. 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.

    More about this item

    Keywords

    financial development; growth; banks; stock markets; crises;

    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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