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Financial Markets, Banks, and Growth : Disentangling the links

Author

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  • Alessandro Giovannini

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

  • Maurizio Iacopetta

    (OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po, SKEMA Business School)

  • Raoul Minetti

    (Michigan State University [East Lansing] - Michigan State University System)

Abstract

The paper reviews the state of the economic literature on the link between financial development and growth. We first examine the issue of measurement of financial development and the debate on the direction of causality between finance and growth. Next, we extensively discuss the various channels through which the financial sector can affect growth, including the increase in the efficiency 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 findings. We conclude by drawing lessons for the current debate on the reform of the financial sector in the aftermath of the Great Recession.

Suggested Citation

  • Alessandro Giovannini & Maurizio Iacopetta & Raoul Minetti, 2013. "Financial Markets, Banks, and Growth : Disentangling the links," Post-Print halshs-01948038, HAL.
    • Handle: RePEc:hal:journl:halshs-01948038
    DOI: 10.3917/reof.131.0105
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01948038
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    15. OZTURK, Ilhan, 2008. "Financial Development And Economic Growth: Evidence From Turkey," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(1), pages 85-98.
    16. Carton, Christine & Ronquillo, Cely, 2008. "Determinantes del crecimiento económico e intermediación bancaria: un análisis empírico para países latinoamericanos [Determinants of economic growth and bank intermediation: empirical analysis for," MPRA Paper 15514, University Library of Munich, Germany, revised 25 Nov 2008.
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    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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