Journal Article10.2307/2118406
Finance and Growth: Schumpeter Might Be Right
TL;DR: In this paper, the authors examined a cross-section of about 80 countries for the period 1960-89 and found that various measures of financial development are strongly associated with both current and later rates of economic growth.
read more
Abstract: Joseph Schumpeter argued in 1911 that the services provided by financial intermediaries - mobilizing savings, evaluating projects, managing risk, monitoring managers, and facilitating transactions -stimulate technological innovation and economic development. The authors present evidence that supports this view. Examining a cross-section of about 80 countries for the period 1960-89, they find that various measures of financial development are strongly associated with both current and later rates of economic growth. Each measure has shortcomings but all tell the same story: finance matters. They present three main findings, which are robust to many specification tests: The average level of financial development for 1960-89 is very strongly associated with growth for the period. Financial development precedes growth. For example, financial depth in 1960 (the ratio of broad money to GDP) is positively and significantly related to real per capita GDP growth over the next 30 years even after controlling for a variety of country-specific characteristics and policy indicators. Financial development is positively associated with both investment rate and the efficiency with which economies use capital. Much work remains to be done, but the data are consistent with Schumpeter's view that the services provided by financial intermediaries stimulate long-run growth.
read more
Chat with Paper
AI Agents for this Paper
Find similar papers on Google Scholar, PubMed and Arxiv
Write a critical review of this paper
Analyze citations of this paper to find unaddressed research gaps
Citations
Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms
TL;DR: In this paper, a positive political economy analysis of the most important revision of the U.S. supervision and regulation system during the last two decades, the 1991 Federal Deposit Insurance Corporation Improvement Act (FDICIA), is presented.
Profitability Determinants of Financial Institutions: Evidence from Banks in Pakistan
TL;DR: In this paper, the authors analyzed the impact of bank-specific, industry-specific and macroeconomic variables on the profitability of banks in Pakistan and found an inverted U-shape relationship between banks size and profitability.
108
Does Mother Nature Corrupt? Natural Resources, Corruption, and Economic Growth
Jens Weidmann
TL;DR: Natural resource abundance creates opportunities for rent-seeking behavior and increases corruption. Corruption negatively impacts economic growth.
108
Banking Crises and Exports : Lessons from the Past
TL;DR: In this article, the authors analyzed the impact of banking crises on manufacturing exports exploiting the fact that sectors differ in their needs for external financing, and found that during a crisis the export of sectors more dependent on external finance grow significantly less than other sectors.
108
Contribution of financial market segments at different stages of development: Transition, cohesion and mature economies compared☆
TL;DR: In this paper, the authors apply a production function approach to investigate the impact of the credit, bond and stock segments in nine EU-accession countries over early years of transition (1996-2000) and compare these to mature market economies and to countries at intermediate stage.
107
References
On the mechanics of economic development
TL;DR: In this article, the authors consider the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development, and compare three models and compared to evidence.
21.5K
The mechanics of economic development
Robert E. Lucas
- 01 Jan 1988
Abstract: This paper considers the prospects for constructing a neoclassical theory of growth and international trade that is consistent with some of the main features of economic development. Three models are considered and compared to evidence: a model emphasizing physical capital accumulation and technological change, a model emphasizing human capital accumulation through schooling, and a model emphasizing specialized human capital accumulation through learning-by-doing.
20.8K
•Book
The theory of economic development
Joseph A. Schumpeter
- 01 Jan 1934
TL;DR: Buku ini memberikan infmasi tentang aliran melingkar kehidupan ekonomi sebagaimana dikondisikan oleh keadaan tertentu, fenomena fundamental dari pembangunan EKonomi, kredit, laba wirausaha, bunga atas modal, and siklus bisnis as mentioned in this paper.
18.5K
A Contribution to the Empirics of Economic Growth
TL;DR: The authors examined whether the Solow growth model is consistent with the international variation in the standard of living, and they showed that an augmented Solow model that includes accumulation of human as well as physical capital provides an excellent description of the cross-country data.
Endogenous Technological Change
TL;DR: In this paper, the authors show that the stock of human capital determines the rate of growth, that too little human capital is devoted to research in equilibrium, that integration into world markets will increase growth rates, and that having a large population is not sufficient to generate growth.