Abstract
Using a panel data set for 35 developing countries over the period 1970-2003, this study analyzes the role of financial sector development in economic growth and domestic and foreign capital accumulation. A major finding of the study is that financial sector development affects per capita GDP mainly through its role in efficient resource allocation, rather than its effects on capital accumulation. Furthermore, it is the domestic rather than foreign capital accumulation that is instrumental in increasing per worker output and hence promoting economic growth in the long run. Furthermore, foreign capital also does not stimulate domestic capital accumulation, while domestic capital plays a significant role as a complementary factor for attracting foreign capital.
Article Details
- Year: 2009
- Volume: 30
- Issue: 1
- Pages: 17 - 40
- Accepted: 01.01.2009
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DOI:
https://doi.org/10.5281/zenodo.20825785 -
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How to Cite?
Eatzaz Ahmad, Aisha Malik (2009). Financial Sector Development and Economic Growth: An Empirical Analysis of Developing Countries. Journal of Economic Cooperation and Development, 30(1), 17-40. https://doi.org/10.5281/zenodo.20825785
