Access to Finance and Economic Development
The finance and Economic development Progression There is strong evidence that access to finance is conducive to economic growth. This is a long-standing view in economics. As early as 1939, Joseph Schumpeter, one of the fathers of modern economic thought, highlighted the instrumental part played by banks in encouraging technological progress and economic development. The link between finance and growth is therefore relatively robust. However, the way in which finance is secured also matters. Finance can be accessed through external and internal sources. The former comprise capital inflows received from the rest of the world, while internal sources are the resources that an economy can muster on its own. Let me review both in turn. “The channels through which finance fastens growth include: Access to finance through external sources Over recent years we have witnessed a significant rebound in capital inflows, contributing to an acceleration in growth in emerging economies. Financial in