ABSTRACT
This chapter attempts to synthesize diverse research findings on financial innovations and their impacts on capital markets and regulatory and financial policies, and resulting measurable and monitorable impacts of these factors on economic growth. Political business cycles have periodically resulted in rigidities in market development that fostered bureaucratic over entrepreneurial growth, entrance barriers over access, economic concentration over competition, restrictions over flexibility, and regulation over incentives. Macroeconomic analysis regarding investment finance usually focuses upon the relationship between national savings and investment aggregates. The chapter addresses the origins and complications of the thrift crisis in another forthcoming study; it is important to note the severe effects of the regulations in further weakening both capital markets and other credit channels. It demonstrates that the linkage between growth firms and access to capital credit and equity markets. The broad sweep of American history demonstrates continuity toward expanded economic participation commensurate with political participation.
