Financial Development and Economic Growth - New Data and Empirical Analysis

Graff, Micheal
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.

Citation Formats
M. Graff, “Financial Development and Economic Growth - New Data and Empirical Analysis,” METU Studies in Development, vol. 28, no. 1, pp. 83–110, 2001, Accessed: 00, 2020. [Online]. Available: