@article{oai:nagoya.repo.nii.ac.jp:02001325, author = {SHAMIM, Farkhanda}, journal = {国際開発研究フォーラム, Forum of International Development Studies}, month = {Feb}, note = {Since the days of Adam Smith, the question of what determines the long-term economic growth and the prosperity of nations has been at the core of economics. In the view of recent econometric research on the determinants of economic growth, this paper attempts to address very important question. Do better-developed financial systems cause faster economic development with less volatile economic fluctuations; i. e., is the component of financial depth defined by the legal environment of a country, positively associated with long-run rates of economic growth and gross capital formation and negatively related to the business cycle component of GDP and domestic investment? On the basis of the correlation analysis and Granger causality test results, which state that there exist a significant and causal relationship between financial development indicators and economic growth, cross-country regression analysis is conducted applying GMM technique. Results show that the indicators of the level of financial development--the size of the formal financial intermediary sector relative to GDP, the importance of banks relative to the central bank, the ratio of credit issued to the private sector to GDP--are strongly and robustly correlated with growth and investment. Moreover, the analyses indicate that developed financial systems lead to less volatile business cycles.}, pages = {233--251}, title = {International Evidence on the Role of Financial Sector in Economic Growth with Less Volatile Business Cycles}, volume = {31}, year = {2006} }