Evolution of the Financial Development-Economic Growth - Research Paper Example

Ultimately, this financial development is seen to impact on better quality investments with higher yields and lower risks, thereby fuelling wealth creation and economic growth.  A similar and more recent study conducted by James Ang (2007) found that financial development leads to higher output growth through the promotion of both private savings and private investment, within the context of the Malaysian economy.  It is hoped that this present study will be able to establish findings of a similar nature, but concerned with more than savings and investment, relevant to ten countries with the highest GDP rates,  and within the milieu of the first two years of the 2008 global financial recession.

Ultimately, this financial development is seen to impact on better quality investments with higher yields and lower risks, thereby fuelling wealth creation and economic growth.  A similar and more recent study conducted by James Ang (2007) found that financial development leads to higher output growth through the promotion of both private savings and private investment, within the context of the Malaysian economy.  It is hoped that this present study will be able to establish findings of a similar nature, but concerned with more than savings and investment, relevant to ten countries with the highest GDP rates,  and within the milieu of the first two years of the 2008 global financial recession.1.3  Statement of the Problem This study will undertake to describe the relationship between the financial development of an economy and the growth of that economy.

  It will focus on the economies of four countries:  the United States, the United Kingdom, India, and China.  The study shall also utilize World Bank and IMF indicators to determine their responsiveness to the statistical study on such a causal relationship.1.4  Objectives of the Study In particular, the paper shall seek to establish the following:1.4.1 To investigate the financial indicators representing financial development, as determined by the WB and the IMF 1.4.

2 To determine which among the indicators of economic growth (GDP in local currency, GDP in US dollars, GDP in purchasing power parity, or GDP growth) exhibits the best association with the financial indicators.1.4.3 To assess the relationship between financial indicators and the appropriate economic growth indicator, and the degree to which financial development is influential upon economic growth.