Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/259799 
Year of Publication: 
2022
Series/Report no.: 
W.E.P. - Würzburg Economic Papers No. 102
Publisher: 
University of Würzburg, Department of Economics, Würzburg
Abstract: 
Joseph A. Schumpeter is one of the most famous economists of the 20th century and the 'patron saint' of the finance and growth literature. We have discovered that the prevailing literature has, however, misinterpreted Schumpeter, which leads to puzzling empirical results and difficulties in explaining even fundamental relationships. We argue that this is due to a misrepresentation of the role of banks and liquidity creation and the role of household saving. After a critical discussion of the literature, we provide our own empirical analysis using a panel of 43 countries to explore the relationships between the important variables of the finance and growth literature. Our empirical analysis above all supports Schumpeter's view that credit growth supports GDP growth while saving is irrelevant for credit growth and GDP growth. In sum, a correct interpretation of Schumpeter helps to overcome the theoretical and empirical challenges which confront the prevailing literature.
Subjects: 
Finance-growth nexus
Finance
Financial development
Economic growth
Economic development
Financial intermediation
Bank credit
Liquidity creation
Saving
JEL: 
B20
B22
C10
E44
F30
F43
G21
O11
O16
O4
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.