Financial Development and Economic Growth: Panel Data and Trilateral Analysis

A large body of literatures links financial development to economic growth، yet the channels through which inflation and economic development affect this relationship have been less thoroughly explored. This research takes econometric and trilateral graphic approaches to examine these channels using 99 developing and developed countries during the years 1960-2009. Findings prove that respectively there is a positive، negative and neutral relationship between financial development and economic growth in low، high and very high level of inflation. The effect of countries development situation on finance-growth nexus shows that among the financial development indexes only the effect of M3 is different through developed and developing countries.