Banking, Credit Market Imperfection and Economic Growth
AbstractWe develop a new model that links capital market imperfection to banking emergence and economic growth. It is shown that the banking system emerges endogenously after a first stage of slow economic growth. Interestingly, economic growth increases after the emergence of banking but remains under its potential level. This is due to a credit rationing brake which decreases progressively as the economy develops. Another finding is that a reduction of credit market imperfection reduces the credit rationing stage.
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Bibliographic InfoPaper provided by Economic Research Forum in its series Working Papers with number 540.
Length: 24 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
Publication status: Published by The Economic Research Forum (ERF)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-18 (All new papers)
- NEP-BAN-2010-09-18 (Banking)
- NEP-FDG-2010-09-18 (Financial Development & Growth)
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