Finance: Research, Policy and Anecdotes

Fresh off the print – the Handbook of Finance and Development, co-edited by Ross Levine and yours truly!.  It has been 25 years since Bob King and Ross published the two seminal papers that kicked off the empirical finance and growth literature, so a good moment to take stock.  While these two papers established partial correlations between financial and economic development using cross-country regressions, the literature has subsequently focused on controlling for different endogeneity concerns, including reverse causation, omitted variable bias and measurement bias and has used an array of different data sources.  More recently, non-linearities in the finance-growth literature have been explored as well as the trade-off between growth and stability. At the same time, economic historians have explored the development of financial systems in major economies and how they have interacted with economic development.  Over the past decade or so, financial inclusion and microfinance have become more important, with new data sources opening up, as well as randomized control trials being used.

This handbook includes 20 chapters by leading economists and historians in the field, who give an overview of different aspects (theory, empirics, growth vs. stability, historical accounts, political economy of finance, financial inclusion, SME finance etc) and look forward to future research.   The handbook has been in the making for quite some time, but Ross and I are very happy with the outcome and think that this can be a major reference for anyone interested in this area.

Overview