The fading link? : a new empirical analysis of the relationship between financial development and economic growth

Abstract

This paper contributes to the literature on the finance-growth link by presenting new findings based on a new, larger dataset in number of years, countries and variables that improves over those datasets used in earlier studies. We also use a new and better methodology than the one used before. Our paper demonstrates that financial development, as me measure it, does not have a statistically significant effect on economic growth. This result contradicts the usual results in the previous empirical literature about the link between financial development and economic growth. Our result upholds after have done robustness checks.