More Bankers, More Growth? Evidence from OECD Countries

We re‐examine empirically the finance–growth relationship. We argue that financial deepening should not only be assessed via the familiar measures of financial activity output—the volume of credit—but also through its inputs—for example, the relative number of employees in the financial industry—or...

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Bibliographic Details
Published in:	Economic notes - Monte Paschi Siena 2016-02, Vol.45 (1), p.37-51
Main Authors:	Capelle-Blancard, Gunther, Labonne, Claire
Format:	Article
Language:	eng
Subjects:	Economic growth Economic theory Economics and Finance Global economy Humanities and Social Sciences International Manycountries Studies
Online Access:	Get full text
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Summary:	We re‐examine empirically the finance–growth relationship. We argue that financial deepening should not only be assessed via the familiar measures of financial activity output—the volume of credit—but also through its inputs—for example, the relative number of employees in the financial industry—or the efficiency of the financial‐intermediation process. The latter is measured in this paper by the ratio of credit volume to the number of financial‐sector employees. We compare these measures using the econometric approach recommended by Roodman (). Overall, we fail to find a positive relationship between financial deepening and economic growth in OECD countries over the last 40 years.
ISSN:	0391-5026 1468-0300