• Dilbar Abidova Tashkent Financial Institute
Keywords: economy, growth, finance, real sector


In the view of every country’s endeavors for sustainable economic development, the question of key factors influencing economic growth or recession is becoming more prominent. For several decades now, finance is being considered as one of such factors by some scholars and rejected by others. This article is aimed at analyzing the finance-growth nexus by considering the existing theoretical background, empirical studies, and real life cases. Research has shown that the influence of financial sector on economic growth, and as a result of real sector’s activity, is becoming more obvious, especially in the light of the recent global financial-economic crisis. What remains unknown is the extent to which finance can encourage economies to develop.


Baily, M., & Elliot, D. (2013, July). The Role of Finance in the Economy: Implications for Structural Reform of the Financial Sector.

Beck, T., Demirgüç-Kunt, А., & Levine, R. (2000). A new database on financial development and structure. Open Access publications from Tilburg University. Tilburg University.

Binswanger, M. (1999). Co-evolution between the real and financial sectors: the optimistic “New growth theory view” versus the pessimistic “Keynesian view.” Olten: Fachhochsch. Nordwestschweiz.

Bjellerup, M., & Shahnazarian, H. (2012, November). The Interaction between the Financial System and the Real Economy. 13-23.

Caballero, R., & Farhi, E. (2013). A Model of the Safe Asset Mechanism (SAM): Safety Traps and Economic Policy. NBER Working Paper No. 18737.

Federal Reserve Statistical Release (2014). Z.1 Financial Accounts of the United States (Q4, 2013). Retrieved from

Goldsmith, R. W. (1969). Financial Structure and Development. New Haven and London: Yale University Press.

Gurley, J., & Shaw, E. (1967). Financial Structure and Economic Development. Economic Development and Cultural Change, 15(3), 257-268.

Hicks, J. R. (1969). A Theory of Economic history. Oxford: Oxford University Press.

King, R. G., & Levine, R. (1993). Finance and Growth: Schumpeter Might Be Right. Quarterly Journal of Economics, 108(3), 717-737. doi: 10.2307/2118406

Levine, R. (1997, June). Financial Development and Economic Growth: Views and Agenda. Journal of Economic Literature, 35, 688–726

Levine, R. (2002). Bank-Based or Market-Based Financial Systems: Which is Better? NBER Working Paper No. 9138.

Levine, R. (2004). Finance and Growth: Theory and Evidence. NBER Working Paper No. 10766.

Lucas, R. E. (1988). On the Mechanics of Economic Development. Journal of Monetary Economics, 22, 3-42.

Rajan, R., & Zingales, L. (1998, June). Financial dependence and growth. The American Economic review, 88(3), 559-586.

Sukharev, O. S. (2009). Ecological Efficiency and Functions of Agents Behavior: What Can Economic Theory Say? Bulletin of the University of Perm. Retrieved from

The Economist (2009). When a flow becomes a flood. Retrieved from

Thiel, M. (2001). Finance and economic growth – a review of theory and the available evidence. Retrieved from

Zingales, L., & Rajan, R. (1995). What Do We Know about Capital Structure? Some Evidence from International Data. Journal of Finance, 50(5), 1421-60.