Financial Development and Financial Fragility: Two Sides of the Same Coin?

15 Pages Posted: 24 Apr 2018

See all articles by Svetlana Andrianova

Svetlana Andrianova

University of Leicester - Department of Economics

Panicos Demetriades

University of Leicester - Department of Economics

Date Written: December 2017

Abstract

The paper puts forward three interrelated reasons that account for the recent breakdown of the finance–growth nexus, comprising the use (or abuse) of the relationship by policymakers, capture by ruling elites and institutional constraints. Evidence consistent with these hypotheses is provided from a recent European banking crisis. It concludes that in order to restore the ability of finance to promote growth, the influence of ruling elites on the rule of law, financial regulation and supervision needs to be minimized.

Keywords: Financial development, Financial stability, Ruling elites, Institutions, Cyprus banking crisis

Suggested Citation

Andrianova, Svetlana and Demetriades, Panicos O., Financial Development and Financial Fragility: Two Sides of the Same Coin? (December 2017). Comparative Economic Studies, Vol. 60, Issue 1, 2017, Available at SSRN: https://ssrn.com/abstract=3162046 or http://dx.doi.org/10.1057/s41294-017-0047-z

Svetlana Andrianova (Contact Author)

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Panicos O. Demetriades

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom
+ 44 116 252 2835 (Phone)
+ 44 116 252 2908 (Fax)

HOME PAGE: http://www.le.ac.uk/economics/staff/pd28.html

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