Essay - Financial Development and Economic Growth Hypothesis: the United States of...

1 2
Copyright Notice

Financial Development and Economic Growth


The United States of America has made significant developments with respect to their financial market which in turn has resulted in the form of high economic growth. When we compare ***** US, which has one ***** the most developed financial markets, ***** other less developed countries, we find that the ***** States accumulates capital and grow at a higher r*****te due to markets being more stable. On the o*****r hand, other *****er developed countries have not made much considerable development with respect to ***** ***** which in turn ***** affected their ***** growth. In this paper we will examine the financial development of a less developed country and will measure its effects on its economic growth. For this purpose we will include statistical data to make our point more valid. We will also use measure of financial development such as ***** exchange rate volatilities, stock market size, bank clearings ***** the economic growth indicators such ***** GDP and capital formation data to measure the relationship bet*****en financial ***** ***** ***** growth.

***** ***** purpose ***** comparing the financial development and economic growth of the *****, we have chosen ***** Italian economy ***** financial system. We will ***** the GDP growth rates of both ***** ***** and will measure the level of financial development made by both the markets. Finally ***** will examine as to whether the economy making higher growth with ***** to ***** development has made higher economic growth? The reason for choosing Italian economy for comparison is that it is a lesser developed financial market as compared to the United *****.

***** Development ***** Economic growth - An overview of p*****t studies:

There ***** been a lot ***** rese*****rch already done on the ********** of identifying a relati*****ship between ***** development and economic *****. The questions like does financial development spurs economic growth? To what extent does ***** growth induce a reduction in the incidence of poverty? What can financial development contribute in reducing poverty? are continuously part ***** the economists debate.

Generally it is believed that Economic growth is simply the result of refraining from current consumption. W*****hin an *****, there ***** two general types of commodities. One are the ***** goods and the others ***** the capital goods. The consumption goods are for ***** purpose of general consumers use while capital goods are used for production ***** other commodities. ***** in an economy there is a ***** consumption of consumption goods by the households, ***** considerable part of the income is ***** spent ***** the result is in the form ***** positive net sav*****gs. Because of the saving by the genera households *****d *****ir abstention ***** the purchase of consumption goods, more resources become available for investments. Hence, the household sacrifice their current ***** for the sake of *****ir future consumption. From these available resources for investments, firms borrow money ***** their businesses in order to *****vest ***** ***** in capital goods which will ***** turn add to capital s*****ck


Download complete paper (and others like it)    |    Order a brand new, custom-written paper

Other topics that might interest you:

© 2001–2016   |   Dissertation about Financial Development and Economic Growth Hypothesis: the United States of   |   Term Papers Samples