DESENVOLVIMENTO FINANCEIRO E CRESCIMENTO ECONÔMICO

Abstract

The existence of a causality between financial development and economic growth has been controversial. Recently, a growing body of evidence, both empirical and theoretical, suggests that financial development fosters economic growth. In a market economy, there is a natural separation between generation of savings and entrepreneurial capacity. The link between these elements is the financial system that is in charge of the allocation of investments. The theoretical reasoning is based on the argument that the development of the financial system, by allocating increasing volume of resources to the most productive projects, speeds economic growth. This article reviews some of the empirical evidence and details some of the theoretical arguments.