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

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  • Riccardo Lucchetti
  • Luca Papi
  • Alberto Zazzaro

Abstract

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.

Suggested Citation

  • Riccardo Lucchetti & Luca Papi & Alberto Zazzaro, 2000. "Banks' inefficiency and economic growth: a micro-macro approach," Heterogeneity and monetary policy 0004, Universita di Modena e Reggio Emilia, Dipartimento di Economia Politica.
  • Handle: RePEc:mod:modena:0004
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    More about this item

    Keywords

    Bank efficiency; regional growth;

    JEL classification:

    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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