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New empirical evidence on local financial development and growth

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Author Info
Andrea Vaona () (Facoltà di Economia, Università di Lugano, Svizzera; Kiel Institute for the World Economy, Kiel, Germany; University of Verona, Department of Economic Sciences, Verona, Italy)
Roberto Patuelli () (Facoltà di Economia, Università di Lugano, Svizzera)

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Abstract

In this paper, we show that the regional finance-growth nexus in Italy is robust to a series of innovations with respect to the existing literature on the topic. We use finer measures of economic and financial development, as well as instruments with a deeper economic content. We rely on state-of-the-art cross-sectional and panel estimation methods, and we offer a thorough investigation of the nonlinearities in the relation between finance and growth. Our results show that, while local financial development is a key factor for economic growth, in regions with inefficient courts more credit might translate into reduced growth due to opportunistic behaviour and the consequent misallocation of funds.

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Publisher Info
Paper provided by Biblioteca universitaria di Lugano (University Library of Lugano) in its series Quaderni della facoltà di Scienze economiche dell'Università di Lugano with number 0805.

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Length: 11 pages
Date of creation: 13 May 2008
Date of revision:
Handle: RePEc:lug:wpaper:0805

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Web page: http://www.library.lu.usi.ch

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Related research
Keywords: Finance; Growth; Regions; Italy; Cross-Section Analysis; Panel Data Analysis;

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Find related papers by JEL classification:
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses
O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment
C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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References listed on IDEAS
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    Other versions:
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  5. Guariglia, Alessandra & Poncet, Sandra, 2008. "Could financial distortions be no impediment to economic growth after all? Evidence from China," Journal of Comparative Economics, Elsevier, vol. 36(4), pages 633-657, December. [Downloadable!] (restricted)
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  8. Andrea Vaona, 2008. "Regional evidence on financial development, finance term structure and growth," Empirical Economics, Springer, vol. 34(1), pages 185-201, February. [Downloadable!] (restricted)
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  10. Jappelli, Tullio & Pagano, Marco & Bianco, Magda, 2005. "Courts and Banks: Effects of Judicial Enforcement on Credit Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(2), pages 223-44, April.
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  11. Nicholas Apergis & Ioannis Filippidis & Claire Economidou, 2007. "Financial Deepening and Economic Growth Linkages: A Panel Data Analysis," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(1), pages 179-198, April. [Downloadable!] (restricted)
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  14. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "Does Local Financial Development Matter?," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 929-969, August. [Downloadable!] (restricted)
    Other versions:
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