Finance-Led Growth in the OECD since the 19th century: How Does Financial Development Transmit To Growth?

Jakob Madsen and James Ang

No 1408, Economic Growth Centre Working Paper Series from Nanyang Technological University, School of Social Sciences, Economic Growth Centre

Abstract: It is well established in the literature that financial development (FD) is conducive to growth, and yet the channels through which FD affects growth are not well understood. Using a unique new panel data set for 21 OECD countries over the past 140 years, this paper examines the extent to which FD transmits to growth through ideas production, savings, fixed investment, and schooling. Unionization and agricultural share are used as instruments for FD. The empirical results show that FD influences growth through all four channels. In particular, ideas production is found to be the most important channel through which FD impacts on growth.

Keywords: ideas production; savings; investment; schooling; growth; financial development. (search for similar items in EconPapers)
JEL-codes: O16 O30 O40 O53 (search for similar items in EconPapers)
Pages: 59 pages
Date: 2014-07
New Economics Papers: this item is included in nep-agr, nep-fdg, nep-gro and nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:nan:wpaper:1408

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