Financial markets in development, and the development of financial markets
Open accessAbstract
What is the relationship between markets and development? It is argued that markets promote growth, and that growth in turn encourages the formation of markets. Two models with endogenous market formation are presented to analyze this issue. The first examines the role that financial markets — banks and stock markets — play in allocating funds to the highest valued use in the economic system. It is shown that intermediation will arise under weak conditions. The second focuses on the role that markets play in supporting specialization in economic activity. The consequences of perfect competition in market formation are highlighted.
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Integrity signals
Registry
Cites
Statistics
Claims the paper makes
The claims and statistics of this paper haven’t been checked yet.
Run the check — free, no account needed. It reads the open-access text and checks the sources it cites.
Self-check
Percentages, sums and reported differences re-computed from the paper’s own numbers.
The self-check needs the paper’s full text.
Cites
Financial intermediation and delegated monitoring
Diamond, D. W. (1984) · The Review of Economic Studies · doi:10.2307/2297430 · Cited by 8,476 · see citing works
Flagged first, then by citations
Cited by
Sorted by citations
Financial Development and Economic Growth: Views and Agenda
Levine, R. (1999) · Policy Research Working Papers · doi:10.1596/1813-9450-1678 · Cited by 2,977 · see citing works
Chapter 12 Finance and Growth: Theory and Evidence
Levine, R. (2005) · Handbook of Economic Growth · doi:10.1016/s1574-0684(05)01012-9 · Cited by 2,889 · see citing works
Samargandi, N., Fidrmuc, J., & Ghosh, S. (2015) · World Development · doi:10.1016/j.worlddev.2014.11.010 · Cited by 647 · see citing works
ICT diffusion, financial development, and economic growth: An international cross-country analysis
Cheng, C.-Y., Chien, M.-S., & Lee, C.-C. (2021) · Economic Modelling · doi:10.1016/j.econmod.2020.02.008 · Cited by 457 · see citing works
Choong, C.-K., Baharumshah, A. Z., Yusop, Z., & Habibullah, M. S. (2010) · Japan and the World Economy · doi:10.1016/j.japwor.2009.07.001 · Cited by 182 · see citing works
Financial Development and Economic Growth: The Case of Pakistan
Khan, M. A., Qayyum, A., & Sheikh, S. A. (2005) · The Pakistan Development Review · doi:10.30541/v44i4iipp.819-837 · Cited by 166 · see citing works
Stock market development and economic growth in Africa
Ngare, E., Nyamongo, E. M., & Misati, R. N. (2014) · Journal of Economics and Business · doi:10.1016/j.jeconbus.2014.03.002 · Cited by 123 · see citing works
Al-Malkawi, H.-A. N., Marashdeh, H. A., & Abdullah, N. (2012) · International Journal of Economics and Finance · doi:10.5539/ijef.v4n5p105 · Cited by 105 · see citing works
Financial development and economic growth: global and African evidence
Murinde, V. (2012) · Journal of African Economies · doi:10.1093/jae/ejr042 · Cited by 65 · see citing works
Finance, Growth, and Inequality
Levine, R. (2021) · IMF Working Papers · doi:10.5089/9781513583365.001 · Cited by 62 · see citing works
Department of Management Sciences, C. U., TARIQ, R., KHAN, M. A., & RAHMAN, A. (2020) · The Journal of Asian Finance, Economics and Business · doi:10.13106/jafeb.2020.vol7.no8.161 · Cited by 51 · see citing works
“Most previous studies (for instance, Schumpeter, 1912; Robinson, 1960; Greenwood & Jovanovic, 1990; King & Levine, 1993; Greenwood & Smith, 1997; Levine, 2005) predicted a linear relationship between finance and growth.”
BackgroundJima, M. D., & Makoni, P. L. (2023) · Journal of Risk and Financial Management · doi:10.3390/jrfm16060299 · Cited by 39 · see citing works
Is too much liquidity harmful to economic growth?
Chu, L. K., & Chu, H. V. (2020) · The Quarterly Review of Economics and Finance · doi:10.1016/j.qref.2019.07.002 · Cited by 18 · see citing works
Financial Development And Economic Growth Dynamics In South Asian Region
Alom, K. (2018) · The Journal of Developing Areas · doi:10.1353/jda.2018.0051 · Cited by 16 · see citing works
Sohag, K., Nabilah, A. B., & Begum, R. A. (2015) · International Journal of Economic Policy in Emerging Economies · doi:10.1504/ijepee.2015.068249 · Cited by 12 · see citing works
Orji, A., Onah, C. J., Anthony-Orji, O. I., Ogbuabor, J. E., & Nevo, C. H. (2025) · Journal of Financial Economic Policy · doi:10.1108/jfep-10-2024-0332 · Cited by 1 · see citing works
- Authors
- Greenwood, J., & Smith, B. D.
- Affiliations
- University of Rochester (US)
- The University of Texas at Austin (US)
- Corresponding author
- Smith, Bruce D.
- Venue
- Journal of Economic Dynamics and Control
- Publisher
- Elsevier BV
- Published
- 1997-01
- Volume
- 21
- Issue
- 1
- Pages
- 145-181
- ISSN
- 0165-1889 (ISSN-L)
- OpenAlex
- W2078618079
- Cited by
- 918
- References
- 1
- Citations by year
- 2026: 18 · 2025: 34 · 2024: 26 · 2023: 34 · 2022: 34 · 2021: 59 · 2020: 54 · 2019: 42 · 2018: 35 · 2017: 34 · 2016: 47 · 2015: 38 · 2014: 66 · 2013: 43 · 2012: 36
- FWCI
- 57.89
- Type
- journal article
- Language
- en
- Open access
- hybrid
- doi.org
- Licence
- Locations
- Journal of Economic Dynamics and Control (publishedVersion, cc-by-nc-nd)
- RePEc: Research Papers in Economics (submittedVersion)
- UR Research (University of Rochester) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic theories and models
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Economic Theory and Policy
- Keywords
- financial markets, economic development, financial intermediation, banks, stock market, capital allocation, economic growth, specialization, perfect competition
About these checks
Registry, retraction, Cites and statistics results are computed, not judged, with one exception: a printed reference that no index lists is read once by a model before it counts as a citation error. Claims are extracted by a model and kept only when their quote appears verbatim in the text; each cited source is then checked, with a model’s help, for whether it says what the claim relies on. Those verdicts can be wrong — read the claim’s quote and the cited source before relying on one.
Statistics and arithmetic are recomputed, not judged.
Confidence bands are shown only for fields calibrated on our annotated test set. None is calibrated yet, so no band is shown.
What counts as a claim ›How we measure confidence ›How we check this ›
Are you an author, or do you see a problem with this page? Request a review
