Finance and Growth: VARs with Cointegration for the USA, the UK, and Japan

Masanori Amano

Chapter 6 in Money, Capital Formation and Economic Growth, 2013, pp 99-119 from Palgrave Macmillan

Abstract: Abstract A considerable literature has been developed so far, trying to find the effects of financial development on the real aspects of economic development and, particularly, on the growth of per capita real GDP, since the seminal work of Gurley and Shaw (1955, 1960). They argue that by offering more extensive sorts of saving instruments to households, the development of financial institutions (FIs) can increase saving flow from households and raise firms’ investment volume, with broader menus of loan packages and with risk reduction through the economy of scale and risk-pooling. The development can also enhance the quality (profitability) of investment by specialized screening techniques of FIs. In summary, the development of FIs occurs in advance of, and assists, the development of real economic activity through those avenues.

Keywords: Unit Root; Granger Causality; Financial Development; Capital Formation; Causal Direction (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-137-28183-8_6

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DOI: 10.1057/9781137281838_6

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