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Financial markets, Banks, and Growth : disentangling the links

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Listed:
  • Alessandro Giovannini

    (Sciences PO Paris)

  • Maurizio Iacopetta

    (Ofce & SKEMA Businees Scholl)

  • Raoul Minetti

    (Mishigan State University)

Abstract

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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  • Alessandro Giovannini & Maurizio Iacopetta & Raoul Minetti, 2013. "Financial markets, Banks, and Growth : disentangling the links," Documents de Travail de l'OFCE 2013-23, Observatoire Francais des Conjonctures Economiques (OFCE).
    • Handle: RePEc:fce:doctra:1323
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    19. Su-Yin Cheng & Chia-Cheng Ho & Han Hou, 2014. "The Finance-growth Relationship and the Level of Country Development," Journal of Financial Services Research, Springer;Western Finance Association, vol. 45(1), pages 117-140, February.
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    More about this item

    Keywords

    Financial Development; Growth; banks; stock markets; crises;
    All these keywords.

    JEL classification:

    • G2 - Financial Economics - - Financial Institutions and Services
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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