© 1998 American Economic Association The Journal of Finance. ©2000-2020 ITHAKA. We analyze data from 19 developed and developing countries that have experienced financial crises during the last Select the purchase We widen the understanding of the finance-growth nexus by accounting for the indirect effect of financial development through input-output (IO) linkages in determining the growth of industries across countries. The threshold of the ratio between private credit and GDP above which the contribution of a further expansion of credit to industry growth is negative depends on the degree of industries’ own and upstream financial dependence values and slightly varies across sectors, ranging from 89% to 87%, with higher thresholds observed for sectors with lower own financial dependence but higher upstream … Semantic Scholar is a free, AI-powered research tool for scientific literature, based at the Allen Institute for AI. Once composed primarily of college and university professors in economics, the American Economic Association (AEA) now attracts 20,000+ members from academe, business, government, and consulting groups within diverse disciplines from multi-cultural backgrounds. 2003). Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper examines whether nancial development facilitates economic growth by scrutinizing one rationale for such a relationship; that nancial development reduces the costs of external nance to rms. 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In this note, we revisit an earlier, highly influential paper on Financial Dependence and Growth by Rajan and Zingales (1998), by re-examining their assumptions, and the robustness of their results to alternative theories and interpretations. World Bank Policy Research Working Paper No. You are currently offline. Abstract. The role of the financial sector in economic growth, The dynamics of finance-growth nexus in advanced economies, Is the Relationship between Financial Development and Economic Growth Monotonic? In this paper we first estimate for 16 countries an industrial organization-based measure of banking system competition. Financial Dependence and Growth . This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of … For terms and use, please refer to our Terms and Conditions More>> Rajan, R.G. This paper examines whether nancial development facilitates economic growth by scrutinizing one rationale for such a relationship; that nancial development reduces the costs of external nance to rms. Does finance affect economic growth? Abstract. By Raghuram G. Rajan and Luigi Zingales. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms. Check out using a credit card or bank account with. FINANCIAL DEPENDENCE AND GROWTH ABSTRACT Does finance affect economic growth? Abstract. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. No Access Policy Research Working Papers 21 Jun 2013. Does finance affect economic growth? Search for more papers by this author. The law and finance literature has found that financial markets are better developed in countries with strong legal frameworks (La Porta et al. The views ex-pressed in this paper are those of the authors and do not necessarily … The financial development and growth literature has established that finance matters for growth both at the macroeconomic and microeconomic levels (King and Levine 1993). Read your article online and download the PDF from your email or your account. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of external finance to firms. Bank for International Settlements (BIS) ... Financial Dependence and Growth. The American Economic Review small and medium size enterprises (SMEs) and, This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of…. Some features of the site may not work correctly. 88, issue 3, 559-86 Abstract: This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of external finance to firms. Financial Dependence and Growth. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." of Chicago, the Finance Krishna Kumar, Canice Prendergast, and … Financial Crises, Financial Dependence, and Industry Growth Luc Laeven, Daniela Klingebiel, and Randy Kroszner** Abstract This paper investigates the linkage between financial crises and industry growth. See all articles by Stijn Claessens Stijn Claessens. All Rights Reserved. A number of studies have identified a positive correlation between the level of development of a country’s financial sector and the rate of growth of its per capita income. Does finance affect economic growth? We re-examine their assumptions, and the robustness of their results to alternative theories and interpretations. Michele Gambera. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality. The American Economic Review, 88, 559-586. has been cited by the following article: TITLE: Can the Construction of Social Credit System Alleviate the Influence of Financing Constraints on the Growth of Enterprises? Financial Dependence, Banking Sector Competition, and Economic Growth. View Article Google Scholar 21. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Financial dependence and growth since the crisis (1) Volume 12 No 3 | 7 I.1. The journal publishes 11 issues containing articles on a broad range of topics. Nicola Cetorelli. This item is part of JSTOR collection A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. Nicola Cetorelli. Does Inequality Matter in the Finance-Growth Nexus? As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Financial Dependence, Banking Sector Competition, and Economic Growth. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." Shyn, Yong-Sang.November, 2005.Financial dependence, growth opportunities, and industrial growth in Korea,Report,[Seoul]Korea Institute of Finance,31 Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession and is celebrating over 100 years of publishing. Home Policy Research Working Papers Financial Dependence, Banking Sector Competition, and Economic Growth. Financial Dependence, Stock Market Liberalizations, and Growth Nandini Gupta and Kathy Yuan∗ January 2002 Abstract Stock market liberalizations provide a natural experiment to test for the causal relation between financial development and economic JSTOR is part of ITHAKA, a not-for-profit organization helping the academic community use digital technologies to preserve the scholarly record and to advance research and teaching in sustainable ways. The American Economic Review is a general-interest economics journal. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Request Permissions. Financial Dependence and Growth By RAGHURAM G. RAJAN AND LUIGI ZINGALES * This paper examines whetherfinancial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of … I. Cetorelli is at the Federal Reserve Bank of Chicago and Gambera is at Morningstar, Inc. Financial Dependence and Growth: Diminishing Returns to Improvement in Financial Development Leilei Shen Kansas State University April 7, 2013 Abstract This paper examines how much nancial development facilitates economic growth by nonpara-metrically estimating the e ect of nancial development on reducing the costs of external nance to rms. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data Nicola Cetorelli1 Michele Gambera October 1999 1Federal Reserve Bank of Chicago, 230 S. LaSalle St., Chicago, IL 60604-1413.E-mail: ncetorelli@frbchi.org and Michele.Gambera@chi.frb.org, respectively. In this note, we revisit an earlier, highly influential paper on Financial Dependence and Growth by Rajan and Zingales (1998), by re-examining their assumptions, and the robustness of their results to alternative theories and interpretations. Access supplemental materials and multimedia. Cetorelli, N. and Gamberra, M. (2001): “Banking market structure, financial dependence and growth: international evidence from industry data”, Journal of Finance 56, 617-648. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. We revisit an earlier, highly influential paper on financial dependence and growth by Rajan and Zingales (1998). LVI, NO. This paper provides evidence that bank concentration promotes the growth of those industrial sectors that are more in need of external finance by facilitating credit access to younger firms. Di Patti EB, Dell'Ariccia G. Bank competition and firm creation. 2001;56(2):617–48. 1998; Beck et al. Financial development stimulates growth, in particular in industries dependent on external finance. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Specifically, we ask whether industrial sectors that are relatively more in need of external finance develop disproportionately faster in countries with more-developed financial markets. Chakraborty, Atreya and Charles X. Hu (2006): “Lending relationships in line-of-credit and nonline-of-credit loans: evidence from collateral use in small business”, Journal of Financial Intermediation, forthcoming. THE JOURNAL OF FINANCE * VOL. 3481. Published By: American Economic Association, Access everything in the JPASS collection, Download up to 10 article PDFs to save and keep, Download up to 120 article PDFs to save and keep. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. option. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Country Growth Performance and Temporary Shocks, Domestic Saving and International Capital Flows Reconsidered, View 2 excerpts, cites results and methods, By clicking accept or continuing to use the site, you agree to the terms outlined in our. Cetorelli N, Gambera M. Banking market structure, financial dependence and growth: International evidence from industry data. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. Introduction The global financial crisis has deeply affected the growth and finance nexus via several channels, including wide-scale private deleveraging, tighter credit constraints for some economic agents, e.g. All are professionals or graduate-level students dedicated to economics research and teaching. Abstract: Does finance affect economic growth? Does finance affect economic growth? Raghuram Rajan and Luigi Zingales () American Economic Review, 1998, vol. In this paper we show that more efficient banks are particularly important in stimulating both output and productivity growth, while traditional volume measures of finance are much less important for productivity growth. 49 Pages Posted: 1 Feb 2005. 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