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Financial Intermediation, Entrepreneurship And Economic Growth

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  • Wenli Cheng

Abstract

This paper presents a simple general equilibrium model of financial intermediation, entrepreneurship and economic growth. In this model, the role of financial intermediation is to pool savings and to lend the pooled funds to an entrepreneur, who in turn invests the funds in a new production technology. The adoption of the new production technology improves individual real income. Thus financial intermediation promotes economic growth through affecting individuals’ saving behaviour and enabling the adoption of a new production technology.

Suggested Citation

  • Wenli Cheng, 2007. "Financial Intermediation, Entrepreneurship And Economic Growth," Monash Economics Working Papers 18-07, Monash University, Department of Economics.
    • Handle: RePEc:mos:moswps:2007-18
    as

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    File URL: http://www.buseco.monash.edu.au/eco/research/papers/2007/1807financialcheng.pdf
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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