Does Financial Structure Matter for Economic Growth? The Case for 10 OECD Countries

In this study we aim to investigate the relationship between financial structure and economic growth in 10 OECD countries between the years 1993 and 2014 inclusively. The overall results for panel estimations were obtained using GMM estimator. For further analyses of evolutionary effects of financial structure, the sample then was split in to 4 different sub samples with time span of 5 to 6 years. Our findings indicate that a negative correlation exists between further promotion of financial market and economic growth. Furthermore, there is no optimal financial structure, and financial structure evolves through different economic conditions. Moreover financial development is positively correlated with economic growth and human capital and capital stock both affect the economic growth in a positive manner. This study provides useful thoughts for policymakers that can help them improve their policies; we recommend them to pay more attention policies that enhance the financial development and human capital in order to improve the economic conditions.