A burgeoning literature finds that financial development exerts a first-order impact on long-run economic growth. Levine and Zervos (1998) showthat banking and stock market development are good predictors of economic growth. At the microeconomic level, Demirguc-Kunt and Maksimovic (1998) and Rajan and Zingales (1998) find that financial institutions are crucial for firm and industrial expansion. While disagreements remain, the bulk of existing evidence points to a strong finance-growth nexus.
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Beck, T., Levine, R. (2008). Legal Institutions and Financial Development. In: Ménard, C., Shirley, M.M. (eds) Handbook of New Institutional Economics. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-540-69305-5_12
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