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
Credibility of Rules and Economic Growth: Evidence from a Worldwide Survey of the Private Sector
TL;DR: In this article, the authors proposed a new measurement approach based on firm-level surveys and an indicator of the "credibility of rules" and found that low credibility of rules is associated with lower rates of investment and growth.
Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines
TL;DR: This paper found that proximity to historical mining deposits is associated with reduced entrepreneurship for cities in the 1970s and onward in industries unrelated to mining and found a persistent link between entrepreneurship and city employment growth.
What Segments Equity Markets
TL;DR: In this paper, a new, valuation-based measure of world equity market segmentation is proposed, where the authors identify a country's political risk profile and its stock market development as two additional local segmentation factors as well as the U.S. corporate credit spread as a global segmentation factor.
Financial Liberalization and Financial Fragility
Asli Demirguc-Kunt,Enrica Detragiache +1 more
- 30 Nov 1999
TL;DR: This article studied the relationship between banking crises and financial liberalization using a panel of data for 53 countries for 1980-95 and found that banking crises are more likely to occur in liberalized financial systems.
285
•Posted Content
Granger Causality Tests in Panel Data Models with Fixed Coefficients
Baptiste Venet,Christophe Hurlin +1 more
TL;DR: In this article, an extension of the Granger (1969) causality definition to panel data models with varying coefficients is proposed. And an application to the link between financial deepening and economic growth is proposed with sixteen sub-Saharan countries over the period 1967-1998.
283
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.