Finance and Growth: Schumpeter Might Be Right

Abstract

Finance matters. The level of a country's financial development helps predict its rate of economic growth for the following 10 to 30 years. The data are consistent with Schumpeter's view that the services provided by financial intermediariestimulate longrun growth. Policy Resecnh WorkingPapers disseminat thte findings of work in pogrmsa nd enauogcthecxchaegofidas amngBank aaffand al othe intaesd in devlopnent isses.7hesepaper. disbutedbytheResearchAdvisoy Staff.caythenamesofthe autOaos,rlect orlytbeirviewdaotdshoedWreused and citedarofingly.T findins,itaepgettie ons. ndooncysionsammthbercautr t'own.ieyshould not be antnbuted to the Wosid Bank, its Board of Din ccurs, its managanaa, or anty of its member countries. Polley Research