Finance and development: why should causation matter?

✍ Scribed by Peter Lawrence

• Publisher: John Wiley and Sons
• Year: 2006
• Tongue: English
• Weight: 186 KB
• Volume: 18
• Category: Article
• ISSN: 0954-1748
• DOI: 10.1002/jid.1333

✦ Synopsis

Abstract

The discussion on the relationship between financial development and growth has swung from an initial consensus that financial development follows, or is at least inter‐related with growth, to an almost consensual belief that sustained growth follows from financial development. This paper argues that the relationship is too complex to allow for such generalised assertions. Further, the evidence brought out in contemporary and historical research to support the new consensus is flawed. New research directions need to establish which financial policies work, especially at the micro‐level, and when, and to re‐focus on the issue of the role finance can play in supporting productive investment. Copyright © 2006 John Wiley & Sons, Ltd.