ISSN 2736-1721
Global Journal of Business Management ISSN 6731-4538 Vol. 9 (6), pp. 001-011, June, 2015. © International Scholars Journals
Review
Financial development and economic growth: A review
Chee-Keong Choong1* and Sok-Gee Chan2
1Centre for Economic Studies, Faculty of Business and Finance, Universiti Tunku Abdul Rahman (Perak Campus), Jalan Universiti, Bandar Barat, 31900 Kampar, Perak, Malaysia.
2Institute of China Studies, University of Malaya, 50603 Kuala Lumpur, Malaysia.
Accepted 08 December, 2014
Abstract
The relationship between financial development and economic growth has been subject to the considerable debate in the literature of development and growth. While empirical studies often provide a direct relationship between financial development proxies and growth, much controversy remains about how these results should be interpreted. The study, therefore, discusses four main sources of controversy, namely: the selection and measurement of financial development indicators, the causality direction of the financial development and economic growth, the use of empirical approaches to the finance-growth hypothesis, and the debate concerning the channels by which financial development promotes economic growth.
Key words: Financial development, economic growth.