The Growth-Finance Nexus and European Integration. A Review of the Literature
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A. Carettoni, S. Manzocchi, and P.C. Padoan, December 2001.

Abstract
This paper presents a survey of the literature on the relationship between finance and growth and discusses the implications of this relationship for European integration. A first goal of this paper is to discuss the channels financial systems promote growth through. From a theoretical point of view two different approaches can be singled out. One, based on neo-classical theory, identifies markets as the most efficient financial system in the long run; a second one, assuming asymmetric information in credit markets, attributes to banks a key role also in the more advanced stages of development. Against this background, this paper offers a first look at the connections between the more recent developments in the growth finance literature and the new European integration framework. It also suggests that the peculiar, and often complex, features of the growth mechanism in Europe, may help to shed some light on more general issues addressed in the growth finance literature.