The Unresolved Dilemma of the Finance-Growth Nexus: a Critical Survey and Future Research Agenda

Eliana Lauretta () and Andrew William Mullineux ()
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Eliana Lauretta: School of Economics, Finance and Accounting, College of Business and Law, Coventry University, United Kingdom
Andrew William Mullineux: Birmingham Business School, Department of Finance, University of Birmingham, United Kingdom

Rivista Internazionale di Scienze Sociali, 2025, vol. 133, issue 3, 259-300

Abstract: In the aftermath of the 2007-2009 financial crisis, renewed attention has been directed toward the role of the financial sector in shaping long-term economic growth. This has highlighted the need to address theoretical limitations within both New Growth Theory (NGT) and Evolutionary Theory (ET) and explore their integration. While existing literature has primarily focused on empirical analyses, recent contributions have begun to emphasize the need for a more robust theoretical foundation to understand the finance-growth nexus. This survey revisits Schumpeter’s insights on economic growth and business cycles through the lens of NGT and ET, to develop a conceptual framework that captures the dynamic interplay between the financial system, economic growth, and cyclical fluctuations. This investigation aims to contribute to the development of a new generation of coherent, theoretically grounded models that more accurately capture the complexities of the finance-growth relationship.

Keywords: Business Cycles; Financial Crises; Financial Innovation; Schumpeter; New Growth Theory; Evolutionary Theory (search for similar items in EconPapers)
JEL-codes: E32 E44 E50 G01 O11 O43 (search for similar items in EconPapers)
Date: 2025
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