Financial Development and Economic Growth - New Data and Empirical Analysis

Date

2001

Author

Graff, Micheal

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The paper discusses the significance of financial development as a determinant of economic development. An empirical analysis is based on panel data covering 93 countries from 1970-90. It draws on a new proxy for financial development that refers to the input of real resources into the financial system. Moreover, interaction effects between financial development and catching-up as well as education are considered. Finally, to clarify the structure of causal relationships, a two-wave path model is estimated. It is shown that finance was predominantly a supply-leading determinant of growth. From about 1975-80, however, financial activity worked considerably less beneficially.

URI

http://www2.feas.metu.edu.tr/metusd/ojs/index.php/metusd/article/view/124/95
https://hdl.handle.net/11511/58557

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Department of Economics, Article