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The Unresolved Dilemma of the Finance-Growth Nexus: a Critical Survey and Future Research Agenda

Author

Listed:
  • Eliana Lauretta

    (School of Economics, Finance and Accounting, College of Business and Law, Coventry University, United Kingdom)

  • Andrew William Mullineux

    (Birmingham Business School, Department of Finance, University of Birmingham, United Kingdom)

Abstract

In the aftermath of the 2007-2009 financial crisis, renewed attention has been directed toward the role of the financial sector in shaping long-term economic growth. This has highlighted the need to address theoretical limitations within both New Growth Theory (NGT) and Evolutionary Theory (ET) and explore their integration. While existing literature has primarily focused on empirical analyses, recent contributions have begun to emphasize the need for a more robust theoretical foundation to understand the finance-growth nexus. This survey revisits Schumpeter’s insights on economic growth and business cycles through the lens of NGT and ET, to develop a conceptual framework that captures the dynamic interplay between the financial system, economic growth, and cyclical fluctuations. This investigation aims to contribute to the development of a new generation of coherent, theoretically grounded models that more accurately capture the complexities of the finance-growth relationship.

Suggested Citation

  • Eliana Lauretta & Andrew William Mullineux, 2025. "The Unresolved Dilemma of the Finance-Growth Nexus: a Critical Survey and Future Research Agenda," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 133(3), pages 259-300.
    • Handle: RePEc:vep:journl:y:2025:v:133:i:3:p:259-300
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    Keywords

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    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G01 - Financial Economics - - General - - - Financial Crises

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