Levine, RossDemirgüç-Kunt, Asli2017-08-282017-08-282008https://hdl.handle.net/10986/28021In this paper, authors first review the literature on the relation between finance and growth. Theory provides ambiguous predictions concerning the question of whether financial development exerts a positive, causative impact on long-run economic growth. The second part of this paper reviews the literature on the historical and policy determinants of financial development. Governments play a central role in shaping the operation of financial systems and the degree to which large segments of the financial system have access to financial services. The authors discuss the relationship between financial sector policies and economic development. The remainder of the paper proceeds as follows. Sections one and two review theory and evidence on the relation between finance and growth. Section three turns to an examination of financial sector policies, and section four concludes.en-USCC BY 3.0 IGOACCESS TO FINANCIAL SERVICESACCESS TO INFORMATIONACCOUNTINGACCOUNTING STANDARDSACTIVE MARKETSAGENCY PROBLEMALLOCATION OF CAPITALALLOCATION OF CREDITAMOUNT OF CAPITALBANK = DEPOSITBANK BRANCHBANK CREDITBANK DOMESTIC CREDITBANK INTERMEDIATIONBANK LENDINGBANK PROFITABILITYBANKING CRISESBANKING SECTORBANKING SECTOR DEVELOPMENTBANKING SYSTEMBANKING SYSTEMSBLACK MARKETBONDBOND MARKETSBONDSCAPITAL ACCUMULATIONCAPITAL ALLOCATIONCAPITAL FLOWSCAPITAL GROWTHCAPITAL INVESTMENTCAPITAL INVESTMENTSCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCAPITAL MARKETSCAPITAL STOCKCENTRAL BANKCENTRAL BANKSCHECKSCIVIL LAWCOMMON LAWCONSUMPTION EXPENDITURESCONTRACT ENFORCEMENTCORPORATE GOVERNANCECORPORATE INSIDERSCREDIT ALLOCATIONCREDIT INFORMATIONCREDIT MARKETCREDIT RATIONINGCREDIT SCORINGCREDITORCREDITORSCREDITWORTHINESSCURRENCYDEPOSIT MONEY BANKSDEPOSITORSDEPOSITSDEVELOPING COUNTRIESDIVERSIFIED PORTFOLIODIVERSIFIED PORTFOLIOSDOMESTIC EQUITIESDUMMY VARIABLESECONOMIC AGENTSECONOMIC DEVELOPMENTECONOMIC EFFICIENCYECONOMIC GROWTHECONOMIC POLICIESECONOMIES OF SCALEENFORCEMENT MECHANISMSENFORCEMENT OF CONTRACTSENTREPRENEURSEQUITY MARKETSEXCHANGE RATEEXPROPRIATIONSEXTERNAL CAPITALEXTERNAL FINANCEEXTERNAL FINANCINGEXTERNAL INVESTORSFAMILIESFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL INTERMEDIARIESFINANCIAL MARKETFINANCIAL MARKETSFINANCIAL REVOLUTIONFINANCIAL SECTOR POLICIESFINANCIAL SYSTEMFINANCIAL SYSTEMSFINANCING OBSTACLESFINANCING REQUIREMENTSFISCAL DISCIPLINEFISCAL POLICIESFISCAL POLICYFIXED ASSETSFIXED COSTFLOW OF INFORMATIONFOREIGN EXCHANGESGOVERNMENT INTERVENTIONGOVERNMENT POLICIESGOVERNMENT REGULATIONGOVERNMENT SECURITIESGOVERNMENT SPENDINGGOVERNMENT SUBSIDIESGROWTH OPPORTUNITIESHOLDINGHOLDINGSHUMAN CAPITALINFLATIONINFLATION RATEINFLATION RATESINFORMATION ASYMMETRIESINFORMATION DISCLOSUREINFORMATION SYSTEMSINFORMATIONAL ASYMMETRIESINSURANCEINTEREST RATEINTEREST RATE SPREADSINTERNATIONAL BANKINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINVESTINGINVESTMENT BANKINGINVESTMENT DECISIONSINVESTMENT FUNDSINVESTMENT OPPORTUNITIESLACK OF CAPITALLEGAL SYSTEMLEGAL SYSTEM ADAPTABILITYLEGAL SYSTEMSLEGAL TRADITIONSLENDERSLENDING DECISIONSLIQUID ASSETSLIQUID MARKETSLIQUIDITY RISKLONG-TERM CAPITALLONG-TERM DEBTLONG-TERM INVESTMENTSMACROECONOMIC ENVIRONMENTMACROECONOMIC INSTABILITYMACROECONOMIC POLICIESMACROECONOMIC STABILITYMARKET CONDITIONSMARKET DEVELOPMENTMARKET FAILURESMARKET INTEGRATIONMARKET LIQUIDITYMARKET PARTICIPANTSMARKET SIZEMARKET TRANSACTIONMICRO DATAMINORITY SHAREHOLDERSMONETARY FUNDMONETARY POLICYMUTUAL FUNDSNATIONAL SAVINGSNATIONAL STOCK EXCHANGENATIONAL STOCK EXCHANGESOUTSIDE INVESTORSOWNERSHIP STRUCTUREPOLITICAL ECONOMYPOLITICAL STABILITYPORTFOLIOPRICE MOVEMENTSPRIVATE CREDITPRIVATE ENTERPRISESPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE PROPERTYPRIVATE REGISTRIESPROPERTY RIGHTSPROPERTY RIGHTS PROTECTIONPURCHASING POWERRATES OF RETURNREAL INTERESTREAL INTEREST RATESRETURNSRISK DIVERSIFICATIONRISK MANAGEMENTRISK MANAGEMENT SERVICESRISK SHARINGSAVINGS RATESAVINGS RATESSECURITIESSECURITIES MARKETSSETTLEMENTSHAREHOLDERSHAREHOLDERSSHORT-TERM BORROWINGSMALL BUSINESSSMALL BUSINESS LENDINGSTOCK EXCHANGESSTOCK MARKETSTOCK MARKET CAPITALIZATIONSTOCK MARKET DEVELOPMENTSTOCK MARKETSSTOCK RETURNSTOCKSSUPERVISORY AGENCIESTAXTAX SYSTEMSTRADINGTRANSACTIONTRANSACTION COSTSTRANSACTIONS COSTSTRANSITION COUNTRIESTURNOVERWorking PaperWorld Bank10.1596/28021