Ferreira, Maria CândidaVenâncio, Sara Filipa Meixedo2014-01-072014-01-072013Venâncio, Sara Filipa Meixedo. 2013. "Does financial development promote economic growth?". Dissertação de Mestrado. Universidade de Lisboa. Instituto Superior de Economia e Gestão.http://hdl.handle.net/10400.5/6301Mestrado em Economia Monetária e FinanceiraThis study investigates the relationship between financial development and economic growth, using two panel of 17 and 19 developed countries, covering the period from 1980 to 2011 and 2000 to 2011, respectively. This study includes variables that measure the development of the financial sector in order to explain the GDP per capita growth, using modified ordinary least squares, fixed and random effects estimations. The results indicate that domestic credit provided by banking sector and domestic credit to the private sector are (in most estimations) negatively correlated with growth. This may be explained by poor and inefficient credit allocation. The results also show that gross domestic savings and M2 play a significant role in economic growth. Moreover, the ratio non-performing loans/total loans is positively correlated with GDP, particularly for estimations where credit variables were excluded. Little evidence was found from the relationship between liquidity provided by the banking system and capital markets, and economic development.engFinancial developmentEconomic growthOLS estimatorsmaster thesis