Empirical Study on Effect Financial Development level on Economic Growth

The relationship between economic growth and financial development has received a lot of attention in economic literature in recent years. The consensus finding, which has also become widely accepted by policymakers, is that financial development has positive, monotonic effect on growth. The relationship between financial development and economic growth may not be uniform, but varies according to the level of financial development of the country. The result of this paper shows that in countries with high income and high level of financial development in money and equity market, additional improvement financial has a positive effect on growth. In country with low and middle income and middle level of financial development in money and equity, additional improvement in money market has negative effect on growth and additional improvement in equity market has positive effect on growth.