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Banks, Financial Markets and Growth in Developed Countries: a Survey of the empirical literature

  • Michiel Bijlsma

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  • Andrei Dubovik

    ()

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    We review the literature on finance and growth with a focus on developed countries We find little evidence that increases in the traditional proxies for financial development will enhance growth in these countries. Potential causes include: decreasing returns, misallocation of credit, difficulties in measuring efficient financial development, and increasing macroeconomic or systemic risk. To stimulate efficient financial intermediation, policy makers should focus on lending to firms instead of consumers; avoid too high concentration levels; and keep government ownership of banks at a minimum.

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    Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 266.

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    Date of creation: Feb 2014
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    Handle: RePEc:cpb:discus:266
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