The Finance-Growth-Nexus Revisited: New Evidence and the Need for Broadening the Approach

Europainstitut Working Paper No. 73

38 Pages Posted: 24 May 2007

See all articles by Peter R. Haiss

Peter R. Haiss

WU Vienna University of Economics and Business; UniCredit Bank Austria; IES Vienna - Institute for the International Education of Students

Gerhard Fink

Dept of International Business and Trade

Date Written: August 2006

Abstract

This report describes the aim, scope, underlying literature and results of the research project "The Nexus between the Financial and the Real Sector". We studied the contribution of the financial sector as a whole and its individual segments (bank credits, the issuance of bonds and shares) to real economic growth in EU Member and Candidate Countries, the United States and Japan. We supplement existing approaches with the inclusion of the bond market and of foreign direct investment in the banking sector, wherein for the first time, we provide empirical evidence for slightly positive effects thereof. Methodically, we extend previous research by the production-function approach and document the importance of the market microstructure. We recommend to include liberalisation and integration effects, the bond and insurance sector, and effects of foreign bank entry and investment into future research on the Finance-Growth-Nexus.

Suggested Citation

Haiss, Peter R. and Fink, Gerhard, The Finance-Growth-Nexus Revisited: New Evidence and the Need for Broadening the Approach (August 2006). Europainstitut Working Paper No. 73, Available at SSRN: https://ssrn.com/abstract=988299 or http://dx.doi.org/10.2139/ssrn.988299

Peter R. Haiss (Contact Author)

WU Vienna University of Economics and Business ( email )

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Gerhard Fink

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