Finance and Growth: Schumpeter Might Be Right

  title={Finance and Growth: Schumpeter Might Be Right},
  author={Robert G. Levine Ross King},
  journal={Quarterly Journal of Economics},
  • R. King
  • Published 1 August 1993
  • Economics
  • Quarterly Journal of Economics
Joseph Schumpeter argued in 1911 that the services provided by financial intermediaries - mobilizing savings, evaluating projects, managing risk, monitoring managers, and facilitating transactions -stimulate technological innovation and economic development. The authors present evidence that supports this view. Examining a cross-section of about 80 countries for the period 1960-89, they find that various measures of financial development are strongly associated with both current and later rates… 

Tables from this paper

Financial Development-Economic Growth Nexus : Empirical Evidence from Uganda by

This paper investigates the finance-growth nexus in Uganda during the period 19702005. A generic growth model is estimated using modern multivariate cointegration technique developed in Johansen

Financial Development and Economic Growth: Views and Agenda

The author argues that the preponderance of theoretical reasoning and empirical evidence suggests a positive first order relationship between financial development and economic growth. There is

Essay on Finance-Growth Nexus

Abstract There is a long tradition in literature that banks can play a special role in the propagation of economic fluctuations. Theory suggests many channels through which financial system affects,

Financial Development and Economic Growth in Corporatist and Liberal Market Economies

The paper addresses the significance of financial development as a possible determinant of economic growth. Economists and policymakers in transition economies and emerging markets are certainly

Finance and Growth: A Schumpeterian Trip to Africa

Extensive literature has been written about the relationship between financial development and economic growth. Schumpeterians advocate for the positive spillovers of financial services in an

Innovation, Financial Development, and Growth: Evidences from Industrial and Emerging Countries

The debate of the finance–growth nexus can be classified into three dimensions. First, a critical factor innovation that is interacted with financial institutions and thereby should have impact on

Sources and Effectiveness of Financial Development: What We Know and What We Need to Know

There is a broad consensus in the finance-growth literature that, with few exceptions, there exists a positive long-run association between financial development and economic growth. This

Financial liberalization and industry structure nexus : an investigation using dynamic heterogeneous panels from Malawian data

This thesis re-examines the relationship between finance and growth. Most previous studies that have dealt with different aspects of this relationship show that a well-developed financial system is

Finance-growth nexus: Evidence from transition economies

The hypothesis that financial development promotes economic growth enjoys significant empirical support from empirical evidence drawn from both developed and developing countries alike. However,

Does financial development precede growth? Robinson and Lucas might be right

This paper studies whether there is any causal link between financial development indicators and economic growth, using Sims–Geweke causality tests performed in the large panel data set provided by



Financial indicators and growth in a cross section of countries

The authors use existing measures of the financial system - and construct many new measures - to document the relationship between the financial system and long-run growth in a cross-section of

Money and capital in economic development

This books presents a theory of economic development very different from the "stages of growth" hypothesis or strategies emphasizing foreign aid, trade, or regional association. Leaving these aside,

Financial Development, Growth, and the Distribution of Income

A paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined. Financial intermediation promotes growth because it allows a

A Sensitivity Analysis of Cross-Country Growth Regressions

A vast amount of literature uses cross-country regressions to find empirical links between policy indicators and long-run average growth rates. The authors study whether the conclusions from existing

A Contribution to the Empirics of Economic Growth

This paper examines whether the Solow growth model is consistent with the international variation in the standard of living. It shows that an augmented Solow model that includes accumulation of human

Stock Markets, Growth, and Tax Policy

An extensive literature documents the role of financial markets in economic development. To help explain this relationship, this paper constructs an endogenous growth model in which a stock market

Economic Integration and Endogenous Growth

In a world with two similar, developed economies, economic integration can cause a permanent increase in the worldwide rate of growth. Starting from a position of isolation, closer integration can be