The first essay re-examines the growth effects of stock market and banking system development for 64 Middle-income (MICs) and High-income (HICs) countries using dynamic panel GMM and traditional system GMM methods. Regression results show that while bank credit spurs growth of both Upper- and Lower-MICs, stock market liquidity has a robust impact on growth of only the Upper-MICs. On the other hand, the bank credit is found to be not robust and the stock market liquidity is only marginally significant in the case of Non-European HICs. For European HICs, the stock market liquidity is found to be not a strong determinant of growth, although the bank credit is.

The second essay attempts to examine the possibly differential growth impacts of financial development using a sample of 40 countries and the period 1989-2012. It employs dynamic panel GMM and traditional GMM models to four more homogeneous income convergence clubs, identified using a regression based club convergence test suggested by Phillips and Sul (2007). Regression results show that financial development, particularly banking system development, has different growth effects depending on the fundamentals and stages of development of countries analyzed.