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Understanding the Finance–Growth Nexus from a Multidimensional Perspective

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  • Guangdong Xu

Abstract

This paper discusses the multidimensional nature of banking development and its effects on economic growth. Previous studies focused on the quantity dimension and overlooked other dimensions of banking development, which may have led to serious omitted variable bias in exploring the determinants of economic growth. However, incorporating other dimensions, such as banking efficiency, into growth models has proven to be a challenging task. More efforts are needed to construct indicators that can be used to proxy banking development in a more inclusive, precise, and consistent manner in future studies. JEL Codes: G21; O16; O47

Suggested Citation

  • Guangdong Xu, 2022. "Understanding the Finance–Growth Nexus from a Multidimensional Perspective," Journal of Emerging Market Finance, Institute for Financial Management and Research, vol. 21(4), pages 412-427, December.
    • Handle: RePEc:sae:emffin:v:21:y:2022:i:4:p:412-427
    DOI: 10.1177/09726527221091403
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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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