Skip to main content
Article thumbnail
Location of Repository

New perspectives on finance and growth

By Panicos O. Demetriades

Abstract

This paper offers a number of new perspectives on the finance and growth literature. It starts by reviewing the empirical evidence on finance and growth, highlighting studies which suggest that financial development may be ineffective in delivering growth in the poorest of countries. The paper proceeds to examine the likely sources of financial (under-)development and argues that: (a) the legal origins view has been largely discredited by lawyers; (b) government ownership of banks is much more of a symptom of weak institutions than a cause of financial under-development. It then argues that political economy explanations of financial development, focussing on the role of incumbents, income and wealth inequality and the evolution of economic institutions, are much more promising hypotheses but remain largely untested. It calls for more work to test and develop further these ideas but warns against over-simplified notions of politics. It ends by reviewing recent work on the political economy origins of financial development and the politics of financial reforms, which suggests that politics plays a greater and more complex role than has so far been recognised by the economics literature on finance and growth

Publisher: Dept. of Economics, University of Leicester
Year: 2008
OAI identifier: oai:lra.le.ac.uk:2381/7488

Suggested articles

Citations

  1. (2002). A doi
  2. (1999). Aggregate Governance Indicators”, World Bank Working Paper 2195. doi
  3. (2000). Banking Systems Around the Globe: Do regulation and Ownership Affect Performance and Stability?” World Bank Working Paper 2325. doi
  4. (1996). Does Financial Development Cause Economic Growth? Time-series Evidence from 16 Countries”, doi
  5. (2004). Does One Size Fit All?: A re-examination of the Finance and Growth Relationship”, doi
  6. (1999). Finance and Growth: Institutional Considerations, Financial Policies and Causality”, doi
  7. (1993). Finance and Growth: Schumpeter Might be Right”, doi
  8. (2001). Finance for Growth: Policy Choices in a Volatile World, doi
  9. (2001). Financial Development and Economic Growth: The Role of Stock Markets”, doi
  10. (2005). Financial Reform: What Shakes it? What Shapes it?”, doi
  11. (2008). Government Ownership of Banks, Institutions and Financial Development", doi
  12. (2004). Institutions as the Fundamental Cause of Long-Run Growth”, doi
  13. (2002). Law, Finance and Economic Growth in China”, doi
  14. (1997). Legal Determinants of External Finance”, doi
  15. (2006). Macroeconometric Modelling with a Global Perspective” The Manchester School Supplement doi
  16. (2007). Making Finance Work for Africa,
  17. (2007). Shareholder Protection: A Leximetric Approach”, doi
  18. (2001). The Colonial Origins of Comparative Development: An Empirical Investigation”. doi
  19. (1997). The Direct Costs of Financial Repression: Evidence from India”, doi
  20. (2003). The Great Reversals: The Politics of Financial Development in the Twentieth Century”, doi
  21. (2008). The Politics of Financial Liberalisation: A Response to Abiad and Mody”,

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.