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Financial Development and Economic Growth in Latin America: Schumpeter is Right!

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  • Manoel Bittencourt

    (Department of Economics, University of Pretoria)

Abstract

In this paper we investigate the role of financial development, or more widespread access to finance, in generating economic growth in four Latin American countries between 1980 and 2007. The results, based on the relatively novel panel time-series analysis, confirm the Schumpeterian prediction which suggests that finance authorises the entrepreneur to invest in productive activities, and therefore to promote economic growth. Furthermore, given the characteristics of the sample of countries chosen, we also highlight the importance of macroeconomic stability, and all the institutional framework that it encompasses, as a necessary condition for financial development, and consequently for growth and prosperity in the region.

Suggested Citation

  • Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers 201014, University of Pretoria, Department of Economics.
    • Handle: RePEc:pre:wpaper:201014
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    References listed on IDEAS

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    3. Moyo, Clement & Le Roux, Pierre, 2018. "Interest rate reforms and economic growth: the savings and investment channel," MPRA Paper 85297, University Library of Munich, Germany.
    4. Antonio N. Bojanic, 2012. "The Impact of Financial Development and Trade on the Economic Growth of Bolivia," Journal of Applied Economics, Taylor & Francis Journals, vol. 15(1), pages 51-70, May.
    5. Andrea F. Presbitero & Roberta Rabellotti, 2014. "Geographical Distance And Moral Hazard In Microcredit: Evidence From Colombia," Journal of International Development, John Wiley & Sons, Ltd., vol. 26(1), pages 91-108, January.
    6. Fenton Ontañon, Rodrigo & Padilla, Ramón, 2013. "Commercial bank financing for micro-enterprises and SMEs in Mexico," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    7. Calderón, César & Fuentes, J. Rodrigo, 2012. "Removing the constraints for growth: Some guidelines," Journal of Policy Modeling, Elsevier, vol. 34(6), pages 948-970.
    8. Calderón, César & Fuentes, J. Rodrigo, 2013. "Government Debt and Economic Growth," IDB Publications (Working Papers) 4641, Inter-American Development Bank.

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    More about this item

    Keywords

    Finance; Growth; Latin America;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • N16 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Latin America; Caribbean
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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