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 December 2025 | Viewed by 19
Special Issue Editor
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
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Keywords
- financial development
- economic growth
- financial institutions
- panel data analysis
- Granger causality
- robustnes tests
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