Financial sector development and economic growth in New Zealand

Abstract

Most of the empirical evidence on how development of the financial sector impacts on economic growth is in a cross-country context. This paper considers the evidence from one country, New Zealand, which has in recent times been subject to substantial economic reforms, not least in the financial sector. Some valid long-run relationships are found between indicators of both banking and stock market development and private savings, but rather more mixed results when considering either real GDP per capita or its growth rate.