Such profitable opportunities can often go unexploited without intermediaries to mobilize and allocate savings. Intermediaries can initiate the creation and transformation of firms' activities. They also provide payment services. In addition to improving resource allocation, financial intermediaries stimulate individuals to save more. Intermediaries also tailor financial instruments to the needs of firms.
Growth can also spur the development of financial services.
Improvements in computers and communications have triggered financial innovations over the past 20 years. And it may be that growth can increase the demand for financial services, sparking their adoption in developing countries. The evidence Rather than focus on causality, past empirical work has relied largely on comparative case studies to document the links between financial and economic development. It also suggests that highly restrictive policies toward financial institutions can thwart both financial and economic development. A recent cross-country Bank study uses an expanded set of measures of financial services, controlling for other phenomena that may also explain economic development.