Banks, stock markets and economic growth in high-income OECD: An empirical investigation

Abstract

This study examines the 21 high income OECD countries to explore the effect of financial development on
economic growth in the highest stage of financial and economic development. In this paper, it was unable to
find strong evidence that banking and stock market development increase the GDP per capita growth or
sources of economic growth which are per capita capital stock growth and productivity growth in the high
income countries. The existing literature also provides some findings about irrelevance of the financial
development on economic growth in high income OECD countries by using different methodologies. The
findings of this paper also show that banking development indicator is statistically significantly related to
capital stock growth instead of productivity growth which is considered as the primary source of growth in the
existing literature.