Three essays on the role of financial markets and pension systems in economic growth

This dissertation examines various aspects of the role of financial market development in economic growth. Chapters 2 and 3 are devoted to the analysis of this phenomenon in the context of an open economy, with particular attention to the case of developing countries. This focus is motivated by the fact that the literature has tended to emphasize the study of the effects of financial market development on growth for a closed economy. Given the growing importance of international financial links for most countries, it is imperative that we better understand how financial factors and growth interact in integrated economies. Chapter 4 focuses on a particular aspect of the domestic financial system---pension funds---and examines the role it plays in influencing economic growth through its contribution to increasing aggregate savings.;In Chapter 2, a simple two-country endogenous growth model is developed in which financial integration can positively influence long-run growth by improving the efficiency of the banking sector. The focus on banks as the sole financial intermediaries in the economy make this set-up particularly applicable to developing countries.;Chapter 3 complements the theoretical work in Chapter 2 by empirically investigating the role of capital flows in the determination of economic growth in a panel data set of 40 developing countries by emphasizing the interaction between capital flows and the level of development of the banking sector. The results suggest that international capital flows do indeed influence long-run growth rates and that the level of development of the banking sector plays a role in this process.;In Chapter 4, the hypothesis that increases in funded pension wealth contribute to higher aggregate savings is tested by employing a panel data set of eleven countries (both industrialized and emerging-market) over the 1982--1993 period. The results suggest that the build-up of pension assets does indeed exert a positive and statistically significant influence on aggregate saving rates, and that this effect differs for industrialized countries and emerging markets.