INFLUENCE OF FINANCIAL SECTOR DEVELOPMENT ON ECONOMIC GROWTH

In the view of every country’s endeavors for sustainable economic development, the question of key factors influencing economic growth or recession is becoming more prominent. For several decades now, finance is being considered as one of such factors by some scholars and rejected by others. This article is aimed at analyzing the finance-growth nexus by considering the existing theoretical background, empirical studies, and real life cases. Research has shown that the influence of financial sector on economic growth, and as a result of real sector’s activity, is becoming more obvious, especially in the light of the recent global financial-economic crisis. What remains unknown is the extent to which finance can encourage economies to develop.

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