Does financial development 'lead' economic growth?

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Shan, Jordan and Morris, Alan G (2002) Does financial development 'lead' economic growth? International review of applied economics, 16 (2). pp. 153-168. ISSN 1465-3486 Online 0269-2171 Print


We use the Toda & Yamamoto (1995) causality testing procedure to investigate the relationship, if any, between financial development and economic growth.We use quarterly data from 19 OECD countries and China, and use total credit and interest spread as indicators of financial development. We also consider the impact of financial development on investment and productivity. We find meagre evidence that financial development 'leads' economic growth, either directly or indirectly. This casts further doubt on claims that financial development is a necessary and perhaps sufficient precursor to economic growth.

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Item type Article
DOI DOI: 10.1080/02692170110118885
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Subjects Historical > RFCD Classification > 340000 Economics
Historical > Faculty/School/Research Centre/Department > School of Economics and Finance
Keywords financial, international economic
Citations in Scopus 66 - View on Scopus
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