Financial Development and Source of Growth: New Evidence

By Sami Ben Naceur, Robert Blotevogel, Mark Fischer, Haiyan Shi

June 28, 2017

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Sami Ben Naceur, Robert Blotevogel, Mark Fischer, and Haiyan Shi. Financial Development and Source of Growth: New Evidence, (USA: International Monetary Fund, 2017) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper examines how financial development affects the sources of growth—productivity and investment—using a sample of 145 countries for the period 1960-2011. We employ a range of econometric approaches, focusing on the CCA and MENA countries. The analysis looks beyond financial depth to capture the access, efficiency, stability, and openness dimensions of financial development. Yet even in this broad interpretation, financial development does not appear to be a magic bullet for economic growth. We cannot confirm earlier findings of an unambiguously positive relationship between financial development, investment, and productivity. The relationship is more complex. The influence of the different dimensions of financial development on the sources of growth varies across income levels and regions.

Subject: Financial institutions, Financial markets, Financial sector development, Income, National accounts, Production, Stock markets, Stocks, Total factor productivity

Keywords: Capital Accumulation, Capital adequacy ratio, Capital stock growth, Financial Development, Financial sector development, Global, Growth, Income, Inflation dummy, Interest rate, Low income, Productivity growth, Stock markets, Stocks, Total Factor Productivity, WP

Publication Details

Pages:

41
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2017/143
Stock No:

WPIEA2017143
ISBN:

9781484302637
ISSN:

1018-5941

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