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Financial Intermediation and Economic Performance: Historical Evidence from Five Industrialized Countries

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Author Info
Rousseau, Peter L
Wachtel, Paul

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Abstract

This paper examines the nature of links between the intensity of financial intermediation and economic performance that operated in the United States, the United Kingdom, Canada, Norway, and Sweden over the 1870-1929 period. After describing the coevolution of the financial and real sectors in these countries, vector error correction models (VECMs) establish the quantitative importance of long-run relationships among measures of financial intensity and real per capita levels of output and the monetary base. Granger causality tests then suggest a leading role for the intermediation variables in real sector activity, while feedback effects are largely insignificant. The results suggest an important role for intermediation in the rapid industrial transformations of all five counries.

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Publisher Info
Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 30 (1998)
Issue (Month): 4 (November)
Pages: 657-78
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Handle: RePEc:mcb:jmoncb:v:30:y:1998:i:4:p:657-78

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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