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Financial markets, Banks, and Growth : disentangling the links

  • Alessandro Giovannini

    (Sciences PO Paris)

  • Maurizio Iacopetta

    (Ofce & SKEMA Businees Scholl)

  • Raoul Minetti

    (Mishigan State University)

The paper reviews the state of the economic literature on the link between nancial development and growth. We rst examine the issue of measurement of nancial development and the debate on the direction of causality between nance and growth. Next, we extensively discuss the various channels through which the nancial sector can aect growth, including the increase in the eciency 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 ndings. We conclude by drawing lessons for the current debate on the reform of the nancial sector in the aftermath of the Great Recession. Classification-G0, G2, O1,O3

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2013-23.

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Date of creation: Oct 2013
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Handle: RePEc:fce:doctra:1323
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