what is the relationship between financial system and economic growth?
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King and Levine (1993) showed that the stage of financial intermediation in a country can be an excellent indicator of long-run economic growth, capital accumulation and output. Additionally, they found that enhanced liquidity in stock markets can lead to accelerating productivity growth.
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Sustainable economic growth is economic development that attempts to satisfy the needs of humans but in a manner that sustains natural resources and the environment for future generations. An economy functions in the ecosystem. ... In fact, an economy cannot exist without it.
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Economic Growth is important because it is the means by which we can improve the quality of our standard of living . It also enables us to cater for any increases in our population without having to lower our standard of living.
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Relation Between Savings and Investment In Classical System According to this theory, Savings (S) gets equated with Investment (I) automatically which otherwise alters the interest rate. If savings exceeds investment, the excess supply of funds brings down the rate of interest.
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Religion and Economic Growth. "For given religious beliefs, increases in church attendance tend to reduce economic growth. In contrast, for given church attendance, increases in some religious beliefs -- notably heaven, hell, and an afterlife -- tend to increase economic growth."
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Growth and development Economic growth deals with an increase in the level of output, but economic development is related to an increase in output coupled with improvement in the social and political welfare of people within a country. Therefore, economic development encompasses both growth and welfare values.
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Government size is measured by government final consumption expenditures and transfer payments. The relationship between government consumption is expected to increase GDP growth for developing countries, and reduce it for industrialized countries. Government consumption can contribute to increased economic growth.
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Indian Financial System – An Overview It plays a vital role in the economic development of the country as it encourages both savings and investment. It helps in mobilising and allocating one's savings. It facilitates the expansion of financial institutions and markets. Plays a key role in capital formation.
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Economic growth is particularly important in developing economies. Reduced Unemployment. A stagnant economy leads to higher rates of unemployment and the consequent social misery. Economic growth leads to higher demand and firms are likely to increase employment.
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According to Haller (2012) , economic growth is the process of increasing the sizes of national economies, the macro-economic indications, especially the GDP per capita, in an ascendant but not necessarily linear direction, with positive effects on the economic-social sector, while development shows us how growth ...
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The main results show that aggregate government expenditures cause economic growth, but economic growth does not cause government expenditures to expand. Therefore, there is a unidirectional causality between government expenditures and economic growth.
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In summary Economic growth means an increase in real national income / national output. Economic development means an improvement in the quality of life and living standards, e.g. measures of literacy, life-expectancy and health care.
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Economic growth refers to an increase over time in a country`s real output of goods and services (GNP) or real output per capita income. Development relates to growth of human capital indexes, a decrease in inequality figures, and structural changes that improve the general population's quality of life.
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Economic growth is measured by changes in a country's Gross Domestic Product (GDP) which can be decomposed into its population and economic elements by writing it as population times per capita GDP. Expressed as percentage changes, economic growth is equal to population growth plus growth in per capita GDP.
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- A growing population can generate economic growth. - The birth of more people means there will be a greater number of parents investing in their youth. -Increased purchases in products such as food, clothing, education-related expenses, sporting goods and toys feed the economy.
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It increases the efficiency of resource allocation and in turn spurs the growth. A well developed financial system promotes investment opportunities to potential businesses, mobilizes savings, enables trading, monitors the workings of managers, offers hedging, and diversifies risk (Levine 1993).
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Increased research and development. High economic growth leads to increased profitability for firms, enabling more spending on research and development. Also, sustained economic growth increases confidence and encourages firms to take risks and innovate.