Financial development
Searched over 200M research papers for "financial development"
Research Analysis by Consensus
Beta · 19 papersConsensus Meter
Yes%
Possibly%
No%
Introduction
Financial development plays a crucial role in economic growth by improving the efficiency of financial intermediation, reducing financing constraints, and fostering entrepreneurship. This synthesis examines the relationship between financial development and various economic outcomes, drawing on insights from multiple research papers.
Key Insights
-
Reduction of Financing Constraints:
- Financial development reduces external financing constraints for firms, facilitating higher investment activity and economic growth .
-
Promotion of Entrepreneurship:
- Higher levels of financial development lead to increased entrepreneurial activity, especially when supported by sound economic and political institutions.
-
Efficiency of Investment:
- Financial development enhances the efficiency of investment rather than merely increasing its volume, contributing to economic growth .
-
Role of Financial Intermediaries:
- Financial intermediaries play a critical role in mobilizing savings, evaluating projects, managing risk, and facilitating transactions, which in turn stimulate technological innovation and economic development .
-
Impact on Micro-Entrepreneurship:
- Access to finance shifts workers from informal micro-entrepreneurship into formal employment, benefiting micro-enterprises with employees and formal firms.
-
Learning and Information Accumulation:
- Financial development driven by the accumulation of information through 'learning by doing' can overcome informational traps and improve the allocation of savings.
-
Cash Flow Sensitivity:
- The sensitivity of firms' cash holdings to their cash flows decreases with financial development, indicating reduced financial constraints.
-
Influence on Corporate Social Responsibility (CSR):
- Financial development can promote socially and environmentally desirable activities through mechanisms like public shareholders, credit channels, and private equity.
Conclusion
Financial development significantly impacts economic growth by reducing financing constraints, promoting entrepreneurship, and enhancing investment efficiency. Financial intermediaries are pivotal in this process, and access to finance can shift labor from informal to formal sectors, boosting productivity. Additionally, financial development can support corporate social responsibility, contributing to sustainable economic development. Overall, the evidence underscores the importance of a well-developed financial system in fostering economic growth and development.
Sources and full results
Most relevant research papers on this topic
Try another search
What are the symptoms of liver disease?
artificial intelligence in education
How do we address the challenges of scalability and manufacturability in nanotechnology?
How can I prevent the common cold?
How do I manage high cholesterol without medication?
what is the closest relative to dinosaurs