This paper examines financial development in the Caucasus and Central Asia (CCA) countries and its impact on growth. The author finds that the CCA countries have made progress in financial development since the early 1990s, but this progress has been uneven, leading to a divergence in financial development across the region. The paper suggests that financial development can boost growth in the CCA and presents stylized facts on the region's financial development relative to emerging market (EM) and low-income country (LIC) peers. The author also discusses the role of policy in promoting financial development and growth in the CCA.
