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Financial Intermediation, Human Capital Development and Economic Growth

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  • Emerson Erik Schmitz
  • Thiago Christiano Silva

Abstract

This paper investigates a potential non-homogeneous relation between financial intermediation and economic growth by levels of human capital development. We focus on a period of exceptional growth of the credit market in Brazil, from 2004 to 2016, and investigate the overall correlation between credit and economic growth. In addition, we examine whether this association is different according to the following factors: bank ownership, type of credit, credit purpose, and type of borrower. We find that credit has positive and relevant connection with economic growth, which is noticeable in regions with intermediate levels of human capital development. This pattern is also observed in the credit provided by private banks, non-earmarked credit lines, credit to specific purposes, and personal credit. These findings may have important implications for policymakers who intend to promote economic growth with the support of financial intermediation.

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  • Emerson Erik Schmitz & Thiago Christiano Silva, 2020. "Financial Intermediation, Human Capital Development and Economic Growth," Working Papers Series 533, Central Bank of Brazil, Research Department.
    • Handle: RePEc:bcb:wpaper:533
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