chapter  9
10 Pages

Financial intermediation and economic growth

The neoclassical growth model of Solow (1956) and Swan (1956) postulates two major sources that contribute to economic growth: accumulation of factors of production and productivity growth (technological progress). In principle, an improvement in the financial systems can affect economic growth via these two channels: the capital accumulation channel and the total factor productivity (TFP) channel. In this book, these two channels are examined separately in the context of Malaysia.