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More Bankers, More Growth? Evidence from OECD Countries
Author(s) -
CapelleBlancard Gunther,
Labonne Claire
Publication year - 2016
Publication title -
economic notes
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.274
H-Index - 19
eISSN - 1468-0300
pISSN - 0391-5026
DOI - 10.1111/ecno.12051
Subject(s) - financial deepening , financial intermediary , economics , financial sector , intermediation , financial ratio , financial system , monetary economics , finance
We re‐examine empirically the finance–growth relationship. We argue that financial deepening should not only be assessed via the familiar measures of financial activity output—the volume of credit—but also through its inputs—for example, the relative number of employees in the financial industry—or the efficiency of the financial‐intermediation process. The latter is measured in this paper by the ratio of credit volume to the number of financial‐sector employees. We compare these measures using the econometric approach recommended by Roodman ([D. Roodman, 2009]). Overall, we fail to find a positive relationship between financial deepening and economic growth in OECD countries over the last 40 years.