Financial indicators and growth in a cross section of countries
The authors use existing measures of the financial system - and construct many new measures - to document the relationship between the financial system and long-run growth in a cross-section of countries between 1960 and 1989. They consider various measures of the size of the financial system, the importance of different financial institutions, the financial system's allocation of credit, the financial system's efficiency, and the degree of financial repression. They use graphs, correlations, and regressions to gauge the robustness of the partial correlation between growth and the financial indicators. They also examine two channels through which financial indicators may be linked to growth: the share of GDP allocated to investment; and the efficiency with which resources are used. They find that many of the financial system indicators are significantly correlated with growth through both investment and efficiency. Moreover, many of these partial correlations remain strong after controlling for initial conditions, dummy variables for Africa and Latin America, and measures of monetary, fiscal, and trade performance. Their analysis suggests that it is empirically important to identify which financial intermediaries aredoing the intermediation and to whom the financial system is allocating credit rather than simply using proxies for the overall size of the financial system, as has been common in past studies.
|Date of creation:||31 Jan 1992|
|Date of revision:|
|Contact details of provider:|| Postal: 1818 H Street, N.W., Washington, DC 20433|
Phone: (202) 477-1234
Web page: http://www.worldbank.org/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- J. Bradford De Long & Lawrence H. Summers, .
"Equipment Investment and Economic Growth,"
J. Bradford De Long's Working Papers
_122, University of California at Berkeley, Economics Department.
- Robert J. Barro, 1989.
"Economic Growth in a Cross Section of Countries,"
NBER Working Papers
3120, National Bureau of Economic Research, Inc.
- Levine, Ross & Renelt, David, 1992.
"A Sensitivity Analysis of Cross-Country Growth Regressions,"
American Economic Review,
American Economic Association, vol. 82(4), pages 942-63, September.
- Levine, Ross & Renelt, David, 1991. "A sensitivity analysis of cross-country growth regressions," Policy Research Working Paper Series 609, The World Bank.
- Stiglitz, Joseph E, 1989. "Financial Markets and Development," Oxford Review of Economic Policy, Oxford University Press, vol. 5(4), pages 55-68, Winter.
- Bencivenga, V.R. & Smith, B.D., 1990.
"Deficits, Inflation, And The Banking System In Developing Countries: The Optimal Degree Of Financial Repression,"
RCER Working Papers
214, University of Rochester - Center for Economic Research (RCER).
- Bencivenga, Valerie R & Smith, Bruce D, 1992. "Deficits, Inflation, and the Banking System in Developing Countries: The Optimal Degree of Financial Repression," Oxford Economic Papers, Oxford University Press, vol. 44(4), pages 767-90, October.
- Levine, Ross, 1991. " Stock Markets, Growth, and Tax Policy," Journal of Finance, American Finance Association, vol. 46(4), pages 1445-65, September.
- Gertler, M. & Rose, A., 1991. "Finance, growth, and public policy," Policy Research Working Paper Series 814, The World Bank.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Nouriel Roubini & Xavier Sala-i-Martin, 1991.
"Financial Repression and Economic Growth,"
NBER Working Papers
3876, National Bureau of Economic Research, Inc.
- Gelb, Alan H., 1989. "Financial policies, growth, and efficiency," Policy Research Working Paper Series 202, The World Bank.
- Giovannini, Alberto & de Melo, Martha, 1990. "Government revenue from financial repression," Policy Research Working Paper Series 533, The World Bank.
When requesting a correction, please mention this item's handle: RePEc:wbk:wbrwps:819. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi)
If references are entirely missing, you can add them using this form.