Financial Development and Economic Growth - A New Empirical Analysis
Dresden Discussion Papers in Economics No. 5/99
The paper describes tests of hypotheses from economic history concerning the significance of financial development as a determinant of economic growth. It goes beyond the existing studies in drawing on a large panel data set covering 93 countries from 1970-90 and includes a new proxy for the resource input into the financial system. Moreover, interaction effects between financial development and catching-up as well as education are considered. Finally, to clarify causal relationships, a two-wave path model is estimated. It is shown that during the 1970s and 1980s finance was a significant and predominantly supply-leading determinant of growth.
Number of Pages in PDF File: 17
Keywords: finance, development, growth, causality
JEL Classification: G20, N20, 016working papers series
Date posted: February 6, 2001
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