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Banks' inefficiency and economic growth: a micro-macro approach

  • Riccardo Lucchetti
  • Luca Papi


  • Alberto Zazzaro

This paper offers a methodological contribution to empirical analysis of the relationships between banking and economic growth by proposing the microeconomic efficiency of banks as a new proxy for the state of development of the banking system. This measure is partly able to overcome the problem of causality and to capture the allocative function of banks.This methodology is then applied to the banking system and economic growth in the Italian regions, using a dynamic panel approach. The econometric results show the existence of an independent effect exerted by banking efficiency on real growth and the importance of the allocative function of banks.

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Paper provided by Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica in its series Heterogeneity and monetary policy with number 0004.

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Length: pages 26
Date of creation: Apr 2000
Date of revision:
Handle: RePEc:mod:modena:0004
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