Specialization, Intermediation, and Growth
AbstractIn market economies financial intermediaries develop during the early stages of industrialization. This paper argues that it occurs because as firms specialize the number of transactions involving credit increases. The main conclusions of the paper are : (a) when increased specialization is a necessary condition for growth, sustained growth may not start if financial intermediaries do not emerge. In this sense, intermediaries are a necessary condition for growth to start and persist; (b) when firms specialize intermediaries endogenously emerge, because they prevent the duplication of monitoring effort. Thus, it is specialization in the real sector which causes the emergence of intermediaries.
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Bibliographic InfoPaper provided by Centro de Economía Aplicada, Universidad de Chile in its series Documentos de Trabajo with number 1.
Date of creation: 1996
Date of revision:
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