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More Bankers, More Growth? Evidence from OECD Countries

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  • Gunther Capelle-Blancard
  • Claire Labonne

Abstract

In this paper, we reexamine empirically the finance/growth nexus. We argue that financial deepening should not only be assessed with familiar measures of financial activities outputs (e.g. credit volume), but also through its inputs (e.g. the relative number of employees in the financial industry) or the efficiency of the financial intermediation process (measured in this paper by the ratio credit volume to number of employees). Overall, our study confirms the absence of a positive relationship between financial deepening and economic growth for OECD countries over the last forty years.

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Bibliographic Info

Paper provided by CEPII research center in its series Working Papers with number 2011-22.

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Date of creation: Nov 2011
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Handle: RePEc:cii:cepidt:2011-22

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Keywords: Finance-growth nexus; optimal size of the financial sector; financial intermediation; bank efficiency; system and difference GMM; BANKING SYSTEM; GROWTH;

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References

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  1. Norman Loayza & Romain Ranciere, 2002. "Financial Development, Financial Fragility, and Growth," Working Papers Central Bank of Chile 145, Central Bank of Chile.
  2. Thomas Philippon & Ariell Reshef, 2009. "Wages and Human Capital in the U.S. Financial Industry: 1909-2006," NBER Working Papers 14644, National Bureau of Economic Research, Inc.
  3. Bordo, Michael D. & Rousseau, Peter L., 2012. "Historical evidence on the finance-trade-growth nexus," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1236-1243.
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  8. Katz, Lawrence & Goldin, Claudia, 2008. "Transitions: Career and Family Life Cycles of the Educational Elite," Scholarly Articles 2799055, Harvard University Department of Economics.
  9. Paul Wachtel & Peter L. Rousseau, 2006. "What is happening to the impact of financial deepening on economic growth?," Working Papers 06-15, New York University, Leonard N. Stern School of Business, Department of Economics.
  10. Thorsten Beck & Ross Levine & Norman Loayza, 1999. "Financial Intermediation and Growth: Causality and Causes," Working Papers Central Bank of Chile 56, Central Bank of Chile.
  11. Rioja, Felix & Valev, Neven, 2004. "Does one size fit all?: a reexamination of the finance and growth relationship," Journal of Development Economics, Elsevier, vol. 74(2), pages 429-447, August.
  12. Luc Laeven & Fabian Valencia, 2010. "Resolution of Banking Crises," IMF Working Papers 10/146, International Monetary Fund.
  13. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934 Elsevier.
  14. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
  15. Beck, Thorsten & Büyükkarabacak, Berrak & Rioja, Felix & Valev, Neven, 2009. "Who Gets the Credit? And Does It Matter? Household vs. Firm Lending across Countries," CEPR Discussion Papers 7400, C.E.P.R. Discussion Papers.
  16. Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
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Cited by:
  1. Gärtner, Stefan & Flögel, Franz, 2014. "Call for a Spatial Classification of Banking Systems through the Lens of SME Finance - Decentralized versus Centralized Banking in Germany as an Example," EconStor Preprints 97512, ZBW - German National Library of Economics.

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