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The finance-specialization-growth nexus: evidence from OECD countries

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  • Franz Hahn

Abstract

Empirical evidence is increasing by emphasizing the positive influence of financial markets on the level and the rate of growth of a country's per-capita income. Theoretically, the rationale for the finance-growth nexus appears to be straightforward: in imperfect economies, financial markets provide valuable services such as mobilizing savings, diversifying risks, allocating savings to investments and monitoring the allocation of managers. By performing these services financial markets work as a very important catalyst of economic growth. Empirical research has so far paid little attention to the mechanisms through which financial development is related to growth. Using a panel data set covering 22 OECD countries over the period 1970 through 2000, we present empirical evidence which suggest that the finance-growth nexus in industrialized countries is due to a higher degree of specialization made possible by financial advancement.

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  • Franz Hahn, 2008. "The finance-specialization-growth nexus: evidence from OECD countries," Applied Financial Economics, Taylor & Francis Journals, vol. 18(4), pages 255-265.
    • Handle: RePEc:taf:apfiec:v:18:y:2008:i:4:p:255-265
    DOI: 10.1080/09603100600827646
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    Cited by:

    1. Adeline Saillard & Thomas Url, 2011. "Venture Capital in Bank- and Market-based Economies," WIFO Working Papers 389, WIFO.
    2. Adeline Saillard & Thomas Url, 2011. "Venture capital in bank - and market - based economies," Documents de travail du Centre d'Economie de la Sorbonne 11025, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
    3. Adeline Saillard & Thomas Url, 2013. "Measuring and Testing Complementarity and Co-evolution in Financial Systems," WIFO Working Papers 457, WIFO.
    4. Karl Aiginger & Gunther Tichy & Ewald Walterskirchen, 2006. "WIFO White Paper: Towards Higher Employment via Economic Growth Based on Innovation and Qualification. Summary," WIFO Studies, WIFO, number 28078.
    5. Franz R. Hahn, 2006. "Teilstudie 5: Der Einfluss der Finanz- und Kapitalmarktsysteme," WIFO Studies, WIFO, number 27444.
    6. Adeline Saillard & Thomas Url, 2011. "Venture capital in bank - and market - based economies," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00593962, HAL.

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