Financial development and economic growth: global and African evidence
Abstract
This paper aims to survey existing research on financial development and economic growth, highlighting the theoretical models and evidence from recent empirical work. Emphasis is placed on the flow-of-funds story (finance matters for economic growth). It is noted that recent evidence is weighted in favour of the argument that financial development, in terms of financial institutions and markets and their role in reducing information asymmetry and pricing risk, is crucial for economic growth. Also, new evidence offers important insights into the mechanisms by which finance induces economic growth, including emerging work on corporate finance as well as work that teases out an implication for inter-generational income distribution and poverty reduction (the finance-and-growth opportunity argument). However, there are some cautionary tales, as well, not least because of financial crises and contagion effects and the threat to sustainable growth and income convergence. Evidence specific to African economies is highlighted and implications for policy are drawn. The paper concludes by proposing the way forward for further research. Copyright 2012 , Oxford University Press.
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Financial sector reforms and stochastic policy simulations: A flow of funds model for India
Moore, T., Green, C. J., & Murinde, V. (2006) · Journal of Policy Modeling · doi:10.1016/j.jpolmod.2005.12.002 · Cited by 13 · see citing works
Self-citationCross-border bank lending versus FDI in Africa's growth story
Brambila‐Macias, J., Massa, I., & Murinde, V. (2011) · Applied Financial Economics · doi:10.1080/09603107.2011.566179 · Cited by 13 · see citing works
Self-citationMichell, J. (2012) · Edward Elgar Publishing eBooks · doi:10.4337/9781849805957.00024 · Cited by 9 · see citing works
Modelling the Macroeconomic Policy Framework for an Emerging Market Economy
Green, C. J., & Murinde, V. (1998) · Manchester School · doi:10.1111/1467-9957.00103 · Cited by 7 · see citing works
Self-citationFlow of Funds: The Relationship between Finance and the Macroeconomy
Green, C. J., & Murinde, V. (2005) · Edward Elgar Publishing eBooks · doi:10.4337/9781845424602.00009 · Cited by 5 · see citing works
Self-citationFinancial Systems In Transition
Fleming, A., & Giugale, M. (2000) · Economic ideas leading to the 21st century · doi:10.1142/4512 · Cited by 5 · see citing works
How Does the Institutional Setting for Creditor Rights Affect Bank Lending and Risk-Taking?
Zhao, T., Murinde, V., & Mlambo, K. (2011) · Stirling Online Research Repository (University of Stirling) · Cited by 3 · see citing works
Self-citation
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Digital financial inclusion and quality of economic growth
Xi, W., & Wang, Y. (2023) · Heliyon · doi:10.1016/j.heliyon.2023.e19731 · Cited by 76 · see citing works
“Existing research widely acknowledges that information asymmetry and high transaction costs are significant obstacles impeding the ability of traditional finance to foster economic development [54 – 56].”
- Authors
- Murinde, V.
- Affiliations
- University of Birmingham (GB)
- Corresponding author
- Murinde, Victor
- ORCID
- Murinde, Victor
- Venue
- Journal of African Economies
- Publisher
- Oxford University Press (OUP)
- Published
- 2011-12-22
- Volume
- 21
- Issue
- suppl 1
- Pages
- i10-i56
- ISSN
- 0963-8024 (ISSN-L)
- 1464-3723
- OpenAlex
- W1981214072
- Cited by
- 65
- References
- 137
- Citations by year
- 2025: 3 · 2024: 4 · 2023: 10 · 2022: 5 · 2021: 8 · 2020: 8 · 2019: 6 · 2018: 4 · 2017: 2 · 2016: 3 · 2015: 2 · 2014: 5 · 2013: 4 · 2012: 1
- FWCI
- 8.53
- Type
- journal article
- Language
- en
- Open access
- closed
- Locations
- Journal of African Economies (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- SOAS Research Online (SOAS University of London) (submittedVersion)
- University of Birmingham Research Portal (University of Birmingham) (submittedVersion)
- Topics
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Physical Sciences › Computer Science › Information Systems › Economic Growth and Development
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Keywords
- financial development, economic growth, financial institutions, financial markets, information asymmetry, risk pricing, corporate finance, intergenerational income distribution, poverty reduction, financial crisis, financial contagion, income convergence, sustainable growth, financial policy, African economies
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