On the real effects of financial development
We study a simple mode of financial and economic development based on consumption of real resources by the financial sector and constant returns to scale in accumulation of physical capital in the production secto. Transition from financial intermediation and firm-production is associated with a process of reallocation of resources towards more productive investiments and financial services. We find that the immediate growth impact of financial development is ambiguous - transition might lead to a periode of output decline. Redistibution policies which do not alter the timing of the transition imposed by the market forces could be not enough to offset the possible negative-growth effects associated with the transition process, and to prevent povertry traps possibly associated with premature emergence of financial intermediation.
|Date of creation:||2000|
|Date of revision:|
|Contact details of provider:|| Postal: Via S. Giorgio 12, I-09124 Cagliari|
Web page: http://www.crenos.unica.it/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jappelli, Tullio & Pagano, Marco, 1992.
"Saving, Growth and Liquidity Constraints,"
CEPR Discussion Papers
662, C.E.P.R. Discussion Papers.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1997.
"Was Prometheus Unbound by Chance? Risk, Diversification, and Growth,"
Journal of Political Economy,
University of Chicago Press, vol. 105(4), pages 709-51, August.
- Daron Acemoglu & Fabrizio Zilibotti, 1994. "Was Prometheus unbound by chance? Risk, diversification and growth," Economics Working Papers 98, Department of Economics and Business, Universitat Pompeu Fabra.
- Acemoglu, Daron & Zilibotti, Fabrizio, 1996. "Was Prometheus Unbound by Chance? Risk, Diversification and Growth," CEPR Discussion Papers 1426, C.E.P.R. Discussion Papers.
- anonymous, 1998. "Financial intermediation and growth," Economics Update, Federal Reserve Bank of Atlanta, issue Jan, pages 4.
- Tullio Jappelli & Marco Pagano, 1998.
"The Welfare Effects of Liquidity Constraints,"
CSEF Working Papers
13, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Panicos O. Demetriades & Philip Arestis, 1996.
"Financial Development and Economic Growth: Assessing the Evidence,"
Keele Department of Economics Discussion Papers (1995-2001)
96/16, Department of Economics, Keele University.
- Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-99, May.
- Valerie R. Bencivenga & Bruce D. Smith, 1991.
"Financial Intermediation and Endogenous Growth,"
Review of Economic Studies,
Oxford University Press, vol. 58(2), pages 195-209.
- Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
- Delano Villanueva & Abbas Mirakhor, 1990. "Strategies for Financial Reforms: Interest Rate Policies, Stabilization, and Bank Supervision in Developing Countries," IMF Staff Papers, Palgrave Macmillan, vol. 37(3), pages 509-536, September.
When requesting a correction, please mention this item's handle: RePEc:cns:cnscwp:200010. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Antonello Pau)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.