The importance of capital markets  Literature around the relationship between capital market development and economic growth goes as far back as 1873, when Walter Bagehot (followed by Joseph Schumpeter and John Hicks in the 1900s) pointed out that industrialisation in most of the developing countries was due to the availability of the financial system to mobilise  BIS central bankers’ speeches  1  productive financial capital.
Today this remains a widely debated topic, with some division among economists regarding the importance of finance for growth and the causal relationship between the two. Some would argue that financial development is not important and that it is actually economic development which creates the demand for financial instruments.