Quotes from “Financial Development and Economic Growth: Views and Agenda”

By Ross Levine (1997)

• More specialization requires more transactions. Because each transaction is costly, financial arrangements that lower transaction costs will facilitate greater specialization. In this way, markets that promote exchange encourage productivity gains.#
  DevelopmentIncreasing Returns
• The financial system is a “real” sector: it researches firms and managers, exerts corporate control, and facilitates risk management, exchange, and resource mobilization.#
  Finance

Ronald McKinnon, Money and Capital in Economic Development (1973)

• Without this access [to external finance], the constraint of self- finance sharply biases investment strategy toward marginal variations within the traditional technology.#
  FinanceDevelopment

Walter Bagehot, Lombard Street (1973)

• [England’s financial] organization is so useful because it is so easily adjusted. Political economists say that capital sets towards the most profitable trades, and that it rapidly leaves the less profitable non-paying trades. But in ordinary countries this is a slow process, . . . In England, however, . . . capital runs as surely and instantly where it is most wanted, and where there is most to be made of it, as water runs to find its level.#
  Finance