CEPII, Recherche et Expertise sur l'economie mondiale
More Bankers, More Growth? Evidence from OECD Countries

Gunther Capelle-Blancard
Claire Labonne

 Highlights :

 Abstract :
In this paper, we reexamine empirically the finance/growth nexus. We argue that financial deepening should not only be assessed with familiar measures of financial activities outputs (e.g. credit volume), but also through its inputs (e.g. the relative number of employees in the financial industry) or the efficiency of the financial intermediation process (measured in this paper by the ratio credit volume to number of employees). Overall, our study confirms the absence of a positive relationship between financial deepening and economic growth for OECD countries over the last forty years.

 Keywords : Finance-growth nexus | optimal size of the financial sector | financial intermediation | bank efficiency | system and difference GMM | BANKING SYSTEM | GROWTH

 JEL : G20
CEPII Working Paper
N°2011-22, November 2011

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 Fields of expertise

Money & Finance