Monetary Depth, Financial Depth, and the Human Development Index

The relationship between economic development, human development and financial intermediation is examined using regression analysis. The Human Development Index (HDI) is used as a measure of the improvement of the human condition. Gross Domestic Product is used as a measure of the improvement in the economic condition. Various measures of money and financial market development are used to measure monetary and financial depth. A sample of 118 countries is divided into four subsamples ranging from highly developed to least developed countries based on GDP per capita. The findings suggest that development of financial market depth is important in explaining human development even before it becomes important in explaining economic development