Stock Markets, Banks, and Economic Growth

Posted: 25 Jul 2000

See all articles by Ross Levine

Ross Levine

Stanford University; National Bureau of Economic Research (NBER)

Sara Zervos

World Bank

Multiple version iconThere are 2 versions of this paper

Abstract

Do well-functionning stock markets and banks promote long-run economic growth? This paper shows that stock market liquidity and banking development both positively, predict growth, capital accumulation, and productivity improvements when entered together in regressions, even after controlling for economic and political factors. The results are consistent with the views that financial markets provide important services for growth, and that stock markets provide different services from banks. The paper also finds that stock market size, volatility, and integration with world markets are not robustly linked with growth, and that none of the financial indicators is closely associated with private saving rates.

JEL Classification: G00, O16, F36

Suggested Citation

Levine, Ross and Zervos, Sara, Stock Markets, Banks, and Economic Growth. Available at SSRN: https://ssrn.com/abstract=236909

Ross Levine (Contact Author)

Stanford University ( email )

Stanford, CA 94305
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Sara Zervos

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

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