10.2478/cer-2018-0015 BRIAN MUYAMBIRI * , NICHOLAS M. ODHIAMBO ** The Causal Relationship between Financial Development and Investment: a Review of Related Empirical Literature Abstract This article reviews the theoretical and empirical literature on the causal rela‑ tionship between fnancial development and investment. Based on the literature considered, it can be concluded that there is little consensus to date on the direc‑ tion of causality between fnancial development and investment. The study con‑ cludes that most of the research done on the causal relationship between fnan‑ cial development and investment is highly skewed towards assessing the causal relationship between the bank‑based side of fnancial development, as compared to the market‑based side of fnancial development. Given the number of studies assessed, the causal relationship between fnancial development and investment appears to be inconclusive, at best. Moreover, the study shows that the relation‑ ship between these two macroeconomic variables seems to difer from country to country; it is dependent on the proxies used to measure the level of fnancial development, as well as the methodology employed. Keywords: Bank‑based fnancial development, Causality, Investment, Market‑based fnancial development JEL: E44, G21, O16 * Senior Lecturer, Botswana Open University, Gaborone, Botswana, email: brianmuy@gmail.com ** Professor, University of South Africa, Pretoria, South Africa, e‐mail: nmbaya99@yahoo.com Brian Muyambiri, Nicholas M. Odhiambo