Abstract. The interaction between financial markets and the real economy is fundamental, considering the several channels through which financial system drives economic growth. While previous studies focused mainly on the correlation between banks, stock markets and economic growth, this study brings a new perspective by adding the bond market and insurance industry to the analysis. Main findings confirm the existence of a positive significant link between capital market and economic development, simultaneously providing new evidence about the positive impact of insurance and bond markets on economic growth, using a panel data set of 32 countries.

Keywords: financial markets, stock market, bonds, insurance, economic development.