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Financial Development and Economic Growth in Latin America: Schumpeter is Right!

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  • Manoel Bittencourt

    ()
    (Department of Economics, University of Pretoria)

Abstract

In this paper we investigate the role of financial development, or more widespread access to finance, in generating economic growth in four Latin American countries between 1980 and 2007. The results, based on the relatively novel panel time-series analysis, confirm the Schumpeterian prediction which suggests that finance authorises the entrepreneur to invest in productive activities, and therefore to promote economic growth. Furthermore, given the characteristics of the sample of countries chosen, we also highlight the importance of macroeconomic stability, and all the institutional framework that it encompasses, as a necessary condition for financial development, and consequently for growth and prosperity in the region.

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File URL: http://web.up.ac.za/sitefiles/file/40/677/WP_2010_14.pdf
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Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 201014.

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Length: 23 pages
Date of creation: Jun 2010
Date of revision:
Handle: RePEc:pre:wpaper:201014

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Keywords: Finance; Growth; Latin America;

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Cited by:
  1. Andrea Filippo Presbitero & Roberta Rabellotti, 2012. "Geographical Distance and Moral Hazard in Microcredit: Evidence from Colombia," Mo.Fi.R. Working Papers 58, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.

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