The paper reviews the state of the economic literature on the link between _nancial development and growth. We first examine the issue of measurement of financial development and the debate on the direction of causality between finance and growth. Next, we extensively discuss the various...

The paper reviews the state of the economic literature on the link between financial development and growth. We first examine the issue of measurement of financial development and the debate on the direction of causality between finance and growth. Next, we extensively discuss the various...

We study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new …rms and by the in-house investment of incumbent …rms. Firms managers engage in tunneling and empire building activities. Active shareholders monitor man- agers, but can...