Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/183613
Authors: 
Méndez, Lizethe
Ongena, Steven
Year of Publication: 
2018
Series/Report no.: 
CFS Working Paper Series No. 604
Abstract: 
We assess the relationship between finance and growth over the period 1980-2014. We estimate a cross-country growth regression for 48 countries during 20 periods of 15 years starting in 1980 (to 1995) and ending in 1999 (to 2014). We use OLS and IV estimations and we find that: 1) overall financial development had a positive effect on economic growth during all periods of our sample, i.e., we confirm that from 1980 to 2014 financial services provided by the various financial systems were significant (to various degrees) for firm creation, industrial expansion and economic growth; but that, 2) the structure of financial markets was particularly relevant for economic growth until the financial crisis; while 3) the structure of the banking sector played a major role since; and finally that, 4) the legal system is the primary determinant of the effectiveness of the overall financial system in facilitating innovation and growth in (almost) all of our sample period. Hence, overall our results suggest that the relationship between finance and growth matters but also that it varies over time in strength and in sector origination.
Subjects: 
Financial Structure
Economic Growth
Financial Development
JEL: 
O16
G10
G20
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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