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Financial Development and Economic Growth. A Theoretical and Empirical Overview

Author

Listed:
  • Filomena Pietrovito

    (Università degli Studi del Molise)

Abstract

This article presents a review of the literature on finance and growth. Theoretical contributions show that the existence of financial institutions, motivated by the reduction of risk aversion and asymmetric information between borrowers and lenders, allows a better resources allocation which, in turn, leads to capital accumulation and technological innovation. Empirical analyses, by adopting different techniques able to measure the functions performed by financial systems, meant to identify the channels through which financial development enhances economic growth, and to attenuate endogeneity biases, suggest that policy makers should take into account the role played by financial systems in sustaining growth

Suggested Citation

  • Filomena Pietrovito, 2012. "Financial Development and Economic Growth. A Theoretical and Empirical Overview," Rivista di Politica Economica, SIPI Spa, issue 3, pages 232-359, July-Sept.
    • Handle: RePEc:rpo:ripoec:y:2012:i:3:p:323-359
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    Citations

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    Cited by:

    1. Filomena Pietrovito, 2014. "Does financial development help to align growth opportunities with growth? Evidence from industry-level data," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 150(2), pages 421-442, May.
    2. Andrew Phiri, 2015. "Asymmetric cointegration and causality effects between financial development and economic growth in South Africa," Studies in Economics and Finance, Emerald Group Publishing Limited, vol. 32(4), pages 464-484, October.

    More about this item

    Keywords

    financial intermediaries; financial markets; financial development; economic growth;
    All these keywords.

    JEL classification:

    • G0 - Financial Economics - - General
    • O0 - Economic Development, Innovation, Technological Change, and Growth - - General

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