Evidence on Finance and Economic Growth

79 Pages Posted: 8 Dec 2017

Date Written: December 6, 2017


This paper reviews and appraises the body of empirical research on the association between financial markets and economic growth that has accumulated over the past quarter-century. The bulk of the historical evidence suggests that financial development affects economic growth in a positive, monotonic way, yet recent research endeavors have provided useful and important qualifications of this conventional wisdom. Moreover, the proliferation of micro-level datasets has enabled researchers to study more precise links between theory and measurement. The paper highlights the mechanisms through which financial markets benefit society, as well as the channels through which finance can slow down long-term growth.

Keywords: financial markets, growth

JEL Classification: O4, G1

Suggested Citation

Popov, Alexander A., Evidence on Finance and Economic Growth (December 6, 2017). ECB Working Paper No. 2115, ISBN: 978-92-899-3031-4, Available at SSRN: https://ssrn.com/abstract=3083917

Alexander A. Popov (Contact Author)

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314

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