The Role of Financial Sector on Economic Growth: Theoretical and Empirical Literature Reviews Analysis

Zunaidah, Sulong and Hamad Omar, Bakar (2018) The Role of Financial Sector on Economic Growth: Theoretical and Empirical Literature Reviews Analysis. Journal of Global Economics, 6 (4). pp. 1-6. ISSN 2375-4389

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Abstract

This article reviews literatures on effect of financial development on economic growth. The samples of literatures from different time frames were taken into consideration to ensure the mixture of ideas and results. The results, implications and discussion were presented at each category. It seems that, the effect of financial development on economic growth is subject to selection of time frames selected, sample of countries, list of variables and proxy. However, in most cases it seems that the impact of financial sector is more significant and positive to the developing countries compared to developed countries. Given the recently development of methodologies in terms of econometrics methods and use of proxy such as Financial index, it is important to apply in the future research. This will help to determine the effect of financial sector on economic growth in more advanced way, rather than relies on past proxy and methodologies.

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