Financial Development and Economic Growth in Latin America: Schumpeter is Right!

Manoel Bittencourt ()

No 201014, Working Papers from University of Pretoria, Department of Economics

Abstract: In this paper we investigate the role of financial development, or more widespread access to finance, in generating economic growth in four Latin American countries between 1980 and 2007. The results, based on the relatively novel panel time-series analysis, confirm the Schumpeterian prediction which suggests that finance authorises the entrepreneur to invest in productive activities, and therefore to promote economic growth. Furthermore, given the characteristics of the sample of countries chosen, we also highlight the importance of macroeconomic stability, and all the institutional framework that it encompasses, as a necessary condition for financial development, and consequently for growth and prosperity in the region.

Keywords: Finance; Growth; Latin America (search for similar items in EconPapers)
JEL-codes: E31 N16 O11 O54 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2010-06
New Economics Papers: this item is included in nep-fdg and nep-mac
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:pre:wpaper:201014

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