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Economies
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The Nexus of Financial Development and Economic Growth: New Evidence...
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The Nexus of Financial Development and Economic Growth: New Evidence in a Changing Global Economy

A special issue of Economies (ISSN 2227-7099).

Deadline for manuscript submissions: 31 July 2026 | Viewed by 1814

Special Issue Editor

Dr. Antonios Adamopoulos

E-Mail Website
Guest Editor
Department of Organization and Business Administration, University of Western Macedonia, 51 100 Grevena, Greece
Interests: applied econometrics; economic development; banking and financial management; economics of energy; tourism economics; economics of education; environmental education

Special Issue Information

Dear Colleagues,

The relationship between financial development and economic growth has been a central topic in modern economic theory and empirical research since a developed financial system can promote economic growth by facilitating savings, efficiently allocating resources, and supporting investment. The influential work of King and Levine (1993), using cross-country empirical data, confirmed that financial sector development is positively correlated with economic growth. Subsequent studies have applied more advanced econometric techniques to address endogeneity issues. Additionally, Granger causality tests are frequently employed to determine the direction of the causal relationship. In conclusion, financial development appears to be a key driver of economic growth, particularly when supported by strong institutions, transparent regulation, and political stability.

This Special Issue theoretically and empirically explores the relationship between financial development and economic growth. Research questions arise to examine the nature of this relationship: Is it unidirectional or bidirectional? Furthermore, this relationship may differ significantly between developed and developing countries, due to varying institutional, political, and economic characteristics. Finally, exploring the effects of the global financial crisis or the COVID-19 crisis on this relationship offers a contemporary dimension to the analysis, potentially revealing new insights into policies that can enhance the role of the financial sector in economic development.

Reference

King, R.G. and Levine, R. (1993) Finance and Growth: Schumpeter Might Be Right. The Quarterly Journal of Economics, 108, 717-737. https://doi.org/10.2307/2118406

Dr. Antonios Adamopoulos
Guest Editor

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 250 words) can be sent to the Editorial Office for assessment.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Economies is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1800 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • financial development
  • economic growth
  • financial institutions
  • panel data analysis
  • Granger causality
  • robustnes tests

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Published Papers (2 papers)

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Research

23 pages, 382 KB  
Article
Tangible and Intangible Determinants of FDI and FPI Inflows: Evidence from BRICS Countries
by Sally Huni, Athenia Bongani Sibindi and Patricia Lindelwa Makoni
Economies 2025, 13(12), 353; https://doi.org/10.3390/economies13120353 - 2 Dec 2025
Viewed by 449
Abstract
While extensive research has explored the determinants of foreign direct investment (FDI) and foreign portfolio investment (FPI) in BRICS nations, there remains a notable gap in understanding the influence of intangible factors, particularly soft power and nation branding. Historically, academic discourse has underemphasized [...] Read more.
While extensive research has explored the determinants of foreign direct investment (FDI) and foreign portfolio investment (FPI) in BRICS nations, there remains a notable gap in understanding the influence of intangible factors, particularly soft power and nation branding. Historically, academic discourse has underemphasized the role of nation branding as a crucial emotional and perceptual component in investment decision-making processes. Consequently, governments in BRICS countries must enhance their national branding efforts to attract both capital and portfolio investment flows. The principal aim of this study was to jointly analyse the tangible and intangible determinants influencing FDI and FPI in BRICS from 1994 to 2024. Employing advanced econometric techniques, specifically the Autoregressive Distributed Lag (ARDL) bounds testing approach for cointegration and Vector Error Correction Models (VECM) for estimation. This study makes a unique contribution to existing literature by examining the nexus between nation branding, FDI and FPI, thereby introducing a novel perspective on the factors driving investment in the BRICS context with an emphasis on non-tangible determinants. The findings indicate that nation branding, along with exchange rate stability, property rights, and financial market development, are significant positive determinants of FPI in these countries. Conversely, capital openness demonstrated a negative relationship with FPI. Moreover, the positive impact of nation branding on FDI within BRICS nations was reaffirmed. This study substantiates the critical role of nation branding as a pivotal driver for both FDI and FPI, emphasising its strategic importance in the economic landscape of BRICS countries. Full article
(This article belongs to the Special Issue The Nexus of Financial Development and Economic Growth: New Evidence in a Changing Global Economy)
18 pages, 307 KB  
Article
Are Institutions, Innovation, and Education the Key to Sustainable Growth in G20 Economies?
by Fırat Cem Dogan
Economies 2025, 13(11), 307; https://doi.org/10.3390/economies13110307 - 28 Oct 2025
Viewed by 990
Abstract
This study aims to examine the fundamental determinants of economic growth in G20 countries in the context of institutional structure, innovation, and education. The significance of the research lies in revealing that sustainable economic growth is shaped not only by traditional macroeconomic factors [...] Read more.
This study aims to examine the fundamental determinants of economic growth in G20 countries in the context of institutional structure, innovation, and education. The significance of the research lies in revealing that sustainable economic growth is shaped not only by traditional macroeconomic factors but also by the effectiveness of institutions, innovation capacity, and human capital investments. The existing literature contains limited studies that comprehensively address the interactions between these three variables and economic growth, specifically in G20 countries. The study applies panel data analysis to G20 countries for the period 2005–2024 and performs panel Granger causality analysis using fixed and random effects models after horizontal section dependence, unit root, and cointegration tests. Empirical findings show that institutions, innovation, and education variables have significant and positive effects on economic growth. Granger causality test results reveal that these variables unidirectionally drive growth, while growth has no feedback effect on these factors. The findings indicate that strengthening institutional reforms, encouraging R&D and innovation investments, and increasing human capital capacity are critical for sustainable and high-quality economic growth for policymakers. Full article
(This article belongs to the Special Issue The Nexus of Financial Development and Economic Growth: New Evidence in a Changing Global Economy)
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