Finance and Growth: Theory and International Evidence Roy Malay Kanti1, Ray Hirak2, Biswas Joydeep3 JEL CLASSIFICATION: C12, C32, G14, F36, G00, O16. 1BIOGRAPHICAL NOTE: Malay Kanti Roy, Reader, University of North Bengal, India. His research papers have been published in the Economic and Political Weekly, Vikalpa, Finance India, Prajnan, South Asia Economic Journal. The author can be reached at malayuni@hotmail.com 2Hirak Ray, Reader, University of North Bengal, India. His research papers have been published in Artha Vijnana, ICFAI Journal of Applied Finance, and South Asia Economic Journal. The author can be reached at hirak_nbu@yahoo.com 3Joydeep Biswas, Corresponding Author and Assistant Controller of Examinations, University of North Bengal, India. His research papers have been published in Economic and Political Weekly, South Asia Economic Journal, Artha Vijnana, Margin–The Journal of Applied Economic Research, Artha Beekshan, Research Bulletin of ICWAI, ICFAI Journal of Applied Finance. The author can be reached at yojpeed@yahoo.co.in Abstract The present study has two-pronged objectives. First, to construct, through the Principal Component Analysis, an index for measuring the stock markets development for twenty-two sample countries and second, using the time series analysis, the form of relationship has been examined for the banking sector and stock markets to the economic growth of each country. The findings of the study exhibit substantial variation across countries even when the same variables and estimation methods have been used and hardly there exists any general consensus about the leading role of finance to the economic growth of a country. Top Keywords Stock Market Development, Weighted Index, Principal Component Analysis, Granger Causality, Economic Growth. Top |