Financial structure, corporate finance, and economic growth

This paper examines how a country’s organization of its financial activities its financial structure affects how corporations invest and raise funds. We provide an analysis of how financial structure affects economic growth for a given degree of financial and economic development. Differences in the organization of financial activities are shown to affect the creation of new businesses as well as the efficiency of investment in existing firms. Though existing research supports some of our conclusions, we identify issues on which further empirical research is required.