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The Politics of Financial Development and Capital Accumulation

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  • Matsuoka, Tarishi
  • Naito, Katsuyuki
  • Nishida, Keigo

Abstract

This paper proposes a simple analytical model to examine conditions in which a government policy to improve imperfect credit markets is practiced through a democratic political process, and analyzes interactions between the politically implemented policy and economic development. Individuals who support the policy are those who can start new investments only after the implementation of it. High income inequality and the low level of capital make the policy hard to implement, which is likely to cause the economy to fall into a poverty trap.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 50181.

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Date of creation: 25 Sep 2013
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Handle: RePEc:pra:mprapa:50181

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Keywords: financial development; economic development; income inequality; majority voting;

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