| By: |
Elias Papaioannou (Dartmouth College, Economics Department, Hanover, NH 03755, USA.) |
| Abstract: |
This paper reviews the literature on the finance-growth nexus within a
neoclassical growth framework, placing an emphasis on the policy implications
in the current European environment, that has placed financial reforms high on
the policy Agenda. While more research is needed to establish causality and
verify the theoretical channels linking access to finance and growth,
firm-level, industry-level, macro, and country-specific studies all tend to
show a significant correlation between financial efficiency and economic
performance. The empirical evidence hint that in underdeveloped and emerging
countries financial development fosters aggregate growth mainly by lowering
the cost of capital, while in advanced economies by raising
total-factor-productivity. JEL Classification: G00, O00. |
| Keywords: |
Finance, Financial Institutions, Development, Growth Decomposition, Financial Intermediation, Europe, Productivity. |
| Date: |
2007–07 |
| URL: |
http://d.repec.org/n?u=RePEc:ecb:ecbwps:20070787&r=fdg |