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New empirical evidence on local financial development and growth

Author

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  • 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)

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.

Suggested Citation

  • Andrea Vaona & Roberto Patuelli, 2008. "New empirical evidence on local financial development and growth," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0805, USI Università della Svizzera italiana.
    • Handle: RePEc:lug:wpaper:0805
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    References listed on IDEAS

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    Cited by:

    1. Hanley, Aoife & Liu, Wan-Hsin & Vaona, Andrea, 2011. "Financial development and innovation in China: Evidence from the provincial data," Kiel Working Papers 1673, Kiel Institute for the World Economy (IfW Kiel).
    2. Roberto Patuelli & Andrea Vaona & Christoph Grimpe, 2010. "The German East‐West Divide In Knowledge Production: An Application To Nanomaterial Patenting," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 101(5), pages 568-582, December.
    3. Rosa Capolupo, 2018. "Finance, Investment and Growth: Evidence for Italy," Economic Notes, Banca Monte dei Paschi di Siena SpA, vol. 47(1), pages 145-186, February.
    4. Swamy, Vighneswara, 2010. "Bank-based Financial Intermediation for Financial Inclusion and Inclusive Growth," MPRA Paper 47510, University Library of Munich, Germany.
    5. Swamy, Vighneswara, 2011. "Does Government Intervention in Credit Deployment Cause Inclusive Growth? – An Evidence from Indian Banking," MPRA Paper 48100, University Library of Munich, Germany.
    6. Adriano Giannola & Antonio Lopes & Alberto Zazzaro, 2013. "La convergenza dello sviluppo finanziario tra le regioni italiane dal 1890 ad oggi," Rivista di Politica Economica, SIPI Spa, issue 1, pages 145-197, January-M.
    7. Aoife Hanley & Wan-Hsin Liu & Andrea Vaona, 2015. "Credit depth, government intervention and innovation in China: evidence from the provincial data," Eurasian Business Review, Springer;Eurasia Business and Economics Society, vol. 5(1), pages 73-98, June.

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    More about this item

    Keywords

    Finance; Growth; Regions; Italy; Cross-Section Analysis; Panel Data Analysis;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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