The changing face of financial development

We provide evidence from a large number of countries which demonstrates the changing nature of the finance–growth nexus. Specifically, we show that financial depth is no longer a significant determinant of long-run growth. Instead we find evidence to suggest that certain financial reforms have sizea...

Full description

Saved in:

Bibliographic Details
Published in:	Economics letters 2016-04, Vol.141, p.87-90
Main Authors:	Demetriades, Panicos O., Rousseau, Peter L.
Format:	Article
Language:	eng
Subjects:	Bank reforms Bank regulation finance–growth nexus Growth models Impact analysis Regulation of financial institutions Regulatory reform Studies
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Description
Summary:	We provide evidence from a large number of countries which demonstrates the changing nature of the finance–growth nexus. Specifically, we show that financial depth is no longer a significant determinant of long-run growth. Instead we find evidence to suggest that certain financial reforms have sizeable growth effects, which can be positive or negative depending on how well banks are regulated and supervised. •The paper demonstrates the changing nature of the finance–growth nexus.•Financial depth is no longer a significant determinant of long-run growth.•Financial reforms have sizeable growth effects that are not always positive.•The effects of financial reforms on growth depend on how well banks are regulated.
ISSN:	0165-1765 1873-7374