TY - JOUR AU - Rousseau, Peter L AU - Sylla, Richard TI - Financial Systems, Economic Growth, and Globalization JF - National Bureau of Economic Research Working Paper Series VL - No. 8323 PY - 2001 Y2 - June 2001 DO - 10.3386/w8323 UR - http://www.nber.org/papers/w8323 L1 - http://www.nber.org/papers/w8323.pdf N1 - Author contact info: Peter L. Rousseau Vanderbilt University Department of Economics Box 1819, Station B Nashville, TN 37235 Tel: 615/343-2466 Fax: 615/343-8425 E-Mail: peter.l.rousseau@vanderbilt.edu Richard Sylla Stern School of Business, Economics New York University 44 West 4th Street New York, NY 10012-1126 Tel: 212/998-0869 Fax: 212/995-4218 E-Mail: rsylla@stern.nyu.edu M1 - published as Peter L. Rousseau, Richard Sylla. "Financial Systems, Economic Growth, and Globalization ," in Michael D. Bordo, Alan M. Taylor and Jeffrey G. Williamson, editors, "Globalization in Historical Perspective" University of Chicago Press (2003) AB - This paper brings together two strands of the economic literature -- that on the finance-growth nexus and that on capital market integration -- and explores key issues surrounding each strand through both institutional/country histories and formal quantitative analysis. We begin with studies of the Dutch Republic, England, the U.S., France, Germany and Japan that span three centuries, detailing how in each case the emergence of a financial system jump-started economic growth. Using a cross-country panel of seventeen countries covering the 1850-1997 period, we then uncover a robust correlation between financial factors and economic growth that is consistent with a leading role for finance, and show that these effects were strongest over the 80 years preceding the Great Depression. Next, we show that countries with more sophisticated financial systems engage in more trade and appear to be better integrated with other economies by identifying roles for both finance and trade in the convergence of interest rates that occurred among the Atlantic economies prior to 1914. Our results suggest that the growth and increasing globalization of these economies might indeed have been 'finance-led.' ER -