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Finance and development: Is Schumpeter's analysis still relevant?

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  • Bertocco, Giancarlo

Abstract

In recent years, numerous studies have been published highlighting the role of financial structures in the development process of contemporary economies. In these recent studies, there is always a reference to the pioneering work of Schumpeter; in particular in the writings of Rajan and Zingales [Rajan, R., Zingales, L. 2003a. Banks and markets: The changing character of european finance, NBER Working Paper Series, No. 9595, March; Rajan, R., Zingales, L. 2003b. The great reversal: The politics of financial development in the twentieth century, Journal of Financial Economics 69, 5-50; Rajan, R., Zingales, L. 2003c. Saving Capitalism from Capitalist, Crown Business Division of Random House, New York], important elements of Schumpeter's theoretical framework are used. These works afford us an interesting opportunity to re-evaluate the importance of Schumpeter's contribution. The thesis put forward in this paper is that while they do indeed highlight important elements of Schumpeter's theory, Rajan and Zingales do not take the implications thereof into account and, furthermore, they neglect certain fundamental aspects of the Schumpeterian analysis that are closely connected with the parts that they consider. This renders their work incomplete, and prevents their analysis from achieving the coherence of Schumpeter's theory.

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  • Bertocco, Giancarlo, 2008. "Finance and development: Is Schumpeter's analysis still relevant?," Journal of Banking & Finance, Elsevier, vol. 32(6), pages 1161-1175, June.
  • Handle: RePEc:eee:jbfina:v:32:y:2008:i:6:p:1161-1175
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    2. Giannetti, Caterina, 2012. "Relationship lending and firm innovativeness," Journal of Empirical Finance, Elsevier, vol. 19(5), pages 762-781.
    3. Giancarlo Bertocco, 2014. "Global Saving Glut and Housing Bubble: A Critical Analysis," Economia politica, Società editrice il Mulino, issue 2, pages 195-218.
    4. Badeeb, Ramez Abubakr & Lean, Hooi Hooi & Smyth, Russell, 2016. "Oil curse and finance–growth nexus in Malaysia: The role of investment," Energy Economics, Elsevier, vol. 57(C), pages 154-165.
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    6. Abdellah Belhadia & Nawal Belbouab, 2014. "Islamic vs. Conventional Banking Role in Non-Oil Growth: A Causal Analysis in the Case of Bahrain," International Journal of Business and Social Research, MIR Center for Socio-Economic Research, vol. 4(12), pages 1-15, December.
    7. Law, Siong Hook & Azman-Saini, W.N.W. & Ibrahim, Mansor H., 2013. "Institutional quality thresholds and the finance – Growth nexus," Journal of Banking & Finance, Elsevier, vol. 37(12), pages 5373-5381.
    8. Brown, James R. & Petersen, Bruce C., 2010. "Public entrants, public equity finance and creative destruction," Journal of Banking & Finance, Elsevier, vol. 34(5), pages 1077-1088, May.
    9. repec:ibn:ijefaa:v:9:y:2017:i:5:p:132-142 is not listed on IDEAS

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