Complete 15 pages APA formatted article: Empirical Evidence-Financial Systems and Economic Activity.

Complete 15 pages APA formatted article: Empirical Evidence-Financial Systems and Economic Activity. er, it was found that the expenditures over research and development, and not fixed capital formation, serve are the medium through which this impact takes place. It was also observed that the interaction amongst the structures and the industrial activity of the country greatly depends upon the levels of its economic growth. The concluding chapter of this paper explains the implications for the economic policy of the consideration that the institutional structure might be inter-related with the type of activity. 2. Review of Economic Performance and Financial Systems Joseph Schumpeter explained in 1912 that how the provision of loan was essential for the development and for the entrepreneurship. According to him, despite giving loan is not central to the normal circular flow, it is true that there exists a gap to overcome in the execution of new combinations. He further affirmed that the obligation of the lender is to bridge this gap, which he very well does by placing the power-to-purchase developed ad hoc at the disposal of the businessman. Thorstein Veblen observed that the mechanism of assessing firms subject to “standardized bureaucratic routine” adopted by the entrepreneurs whom he referred to as the “lieutenants of finance” where as he dubbed the “syndicated bankers” as the “captain of finance” (Veblen, 1919). Nevertheless, Robert Lucas, among various others, debates that the economists poorly exaggerated the importance of financial attributes in economic performance (Lucas, 1988). While the significance of financial systems is doubtful, the efficacy of various sorts of financial systems has been found to be even more controversial.