Intelligence and finance

• This study explores the effect of intelligence on measures of financial development.
• IQ has positive effect on financial development.
• The results remain robust controlling for potential outliers.

This paper explore the effect of intelligence on financial development using data from 180 nations, over the period 2000–2012. The results provide strong support for the claim that intelligence is positively associated with the supply of finance to economy. This paper establishes that, moving from country with the mean IQ score (84.1) to the highest national IQ score (107.1) is associated with 3.6 fold increase in the size of banking sector. The positive effect of intelligence remains intact when we control for other antecedents of financial development.