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Financial intermediation and employment

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Author Info

  • Manoj Pant

    (Jawaharlal Nehru University)

  • Prabal Roy Chowdhury

    ()
    (Indian Statistical Institute, New Delhi)

  • Gurbachan Singh

    (Jawaharlal Nehru University)

Abstract

This paper explores the relationship between financial intermediation and employment. We explain why some economies have low financial intermediation even when financial intermediation is safe. Moreover, we seek to explain why these economies tend to be poor and vulnerable, and also have large self-employment even when the latter has low productivity. We model safe but unsound banks and show that the effects of bad banking can be overcome only partially by corrective taxes. The model is extended to incorporate the illegal sector of the economy as well as the labor laws.

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Bibliographic Info

Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 04-22.

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Length: 33 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:ind:isipdp:04-22

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Keywords: Financial intermediation; self-employment; tax; labor laws;

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  1. Rafael La Porta & Florencio Lopez-deSilanes & Andrei Shleifer & Robert W. Vishny, 1999. "Investor Protection and Corporate Valuation," NBER Working Papers 7403, National Bureau of Economic Research, Inc.
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  14. Yamada, Gustavo, 1996. "Urban Informal Employment and Self-Employment in Developing Countries: Theory and Evidence," Economic Development and Cultural Change, University of Chicago Press, vol. 44(2), pages 289-314, January.
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