Financial Development and Source of Growth: New Evidence

41 Pages Posted: 9 Aug 2017

See all articles by Sami Ben Naceur

Sami Ben Naceur

International Monetary Fund (IMF)

Robert Blotevogel

International Monetary Fund (IMF)

Mark Fischer

International Monetary Fund (IMF)

Haiyan Shi

International Monetary Fund (IMF)

Date Written: June 2017

Abstract

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.

Keywords: Capital accumulation, Total factor productivity, Financial Development, Growth, General

JEL Classification: G21, O16, O40

Suggested Citation

Ben Naceur, Sami and Blotevogel, Robert and Fischer, Mark and Shi, Haiyan, Financial Development and Source of Growth: New Evidence (June 2017). IMF Working Paper No. 17/143. Available at SSRN: https://ssrn.com/abstract=3014053

Sami Ben Naceur (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Robert Blotevogel

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Mark Fischer

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

Haiyan Shi

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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