The Role of Financial institutions and the Economic Growth: A Literature Review

Abstract

The coercion to uplift an economy in a right way to growth is more a mystery than a fact. Every country in the world is determined to be amongst the strong economies of the world. This draws a line of difference between developed and developing economies of the world. Developed countries have strong economies as compared to the developing countries. Economic growth is the major intent of every nation that contributes towards its development but there are certain hurdles such as over population, illiteracy and political instability that hold back their economic growth. Economic growth of every nation is dependent upon the role of financial institutions and the ultimate financial development. Policymakers and economists generally agree that financial development contributes towards financial institutions and markets, such as commercial and investment banks, bond and stock exchanges which in turn lead to economic growth.