Article

The Role of Finance in Economic Development: Benefits, Risks, and Politics

Thorsten Beck

in The Oxford Handbook of Capitalism

Published in print April 2012 | ISBN: 9780195391176
Published online November 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780195391176.013.0007

Series: Oxford Handbooks

 The Role of Finance in Economic Development: Benefits, Risks, and Politics

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This article explores the role of the financial sector for economic growth, the causes and consequences of financial fragility, and the politics behind financial deepening and fragility. In doing so, it identifies the critical role of the financial sector within capitalist economies, a role with bright and dark sides. Specifically, it surveys the large theoretical and empirical literature that links a sound financial system to the process of economic development. It discusses the theoretical and empirical literature on bank fragility and banking crises and surveys the literature on the political economy of financial deepening. Importantly, it relates these three strands of the literature to each other and to the current crisis.

Keywords: financial sector; economic growth; capitalism; banking crisis; political economy

Article.  20114 words. 

Subjects: Economics ; Financial Markets ; Economic Development and Growth

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