## Financial Development and Source of Growth: New Evidence

_IMF Working Papers, June 28, 2017_

## Source details

**Canonical URL:** [Financial Development and Source of Growth: New Evidence](https://www.imf.org/en/publications/wp/issues/2017/06/28/financial-development-and-source-of-growth-new-evidence-44940)

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## Bibliographic details
- Authors: Robert Blotevogel, Mark Fischer, Haiyan Shi
- Published: June 28, 2017
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484302637.001

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### Research question and scope
- Examines how financial development affects the sources of growth—productivity and investment.
- Employs a range of econometric approaches.
- Focus includes the CCA and MENA countries.
- Analysis extends beyond financial depth to capture the access, efficiency, stability, and openness dimensions of financial development.

### Key findings
- Financial development does not appear to be a magic bullet for economic growth.
- The paper cannot confirm earlier findings of an unambiguously positive relationship between financial development, investment, and productivity.
- The relationship between financial development and the sources of growth is more complex than previously reported.
- The influence of different dimensions of financial development on the sources of growth varies across income levels and regions.

### Methodology (high-level)
- Uses a sample of 145 countries for the period 1960-2011.
- Employs a range of econometric approaches (details provided in the working paper).
- Explicitly analyzes multiple dimensions of financial development: depth, access, efficiency, stability, and openness.

### Subject areas and keywords
- Subject: Financial institutions; Financial markets; Financial sector development; Income; National accounts; Production; Stock markets; Stocks; Total factor productivity
- Keywords: Capital Accumulation; capital adequacy ratio; capital stock growth; Financial Development; Financial sector development; Global; Growth; Income; inflation dummy; interest rate; low income; productivity growth; Stock markets; Stocks; Total Factor Productivity; WP

### Summary conclusion
- Broad measures of financial development, incorporating depth, access, efficiency, stability, and openness, do not deliver a uniformly positive effect on investment and productivity across countries.
- Policy conclusions and region/income-specific effects are nuanced and vary by dimension of financial development; see full working paper for detailed econometric results and policy discussion.

*Source: IMF Working Paper "Financial Development and Source of Growth: New Evidence" (Working Paper No. 2017/143), Robert Blotevogel, Mark Fischer, and Haiyan Shi, June 28, 2017.*

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- **Financial Development and Source of Growth: New Evidence, WP/17/143, June 2017**
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_Source: https://www.imf.org/en/publications/wp/issues/2017/06/28/financial-development-and-source-of-growth-new-evidence-44940_