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Banks, Growth And Geography

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  • Raju Jan SINGH

Abstract

This paper presents a general equilibrium endogenous growth model, in which financial intermediaries evaluate the quality of projects, mobilize savings to finance the most promising ones and diversify risk. Information technology available to banks is linked to geographic proximity. This evaluation capacity increases the proportion of high-return projects being financed, and thereby accelerates economic growth. This positive effect does not depend on the degree of individuals´ risk aversion.

Suggested Citation

  • Raju Jan SINGH, 1997. "Banks, Growth And Geography," UNCTAD Discussion Papers 127, United Nations Conference on Trade and Development.
  • Handle: RePEc:unc:dispap:127
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    File URL: http://www.unctad.org/en/docs/dp_127.en.pdf
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    References listed on IDEAS

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    1. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-1037, October.
    2. Bernanke, Ben & Gertler, Mark, 1989. "Agency Costs, Net Worth, and Business Fluctuations," American Economic Review, American Economic Association, vol. 79(1), pages 14-31, March.
    3. Robert G. King & Ross Levine, 1993. "Finance and Growth: Schumpeter Might Be Right," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 717-737.
    4. King, Robert G. & Levine, Ross, 1993. "Finance, entrepreneurship and growth: Theory and evidence," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 513-542, December.
    5. Greenwood, Jeremy & Jovanovic, Boyan, 1990. "Financial Development, Growth, and the Distribution of Income," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 1076-1107, October.
    6. Fama, Eugene F., 1985. "What's different about banks?," Journal of Monetary Economics, Elsevier, vol. 15(1), pages 29-39, January.
    7. Saint-Paul, Gilles, 1992. "Technological choice, financial markets and economic development," European Economic Review, Elsevier, vol. 36(4), pages 763-781, May.
    8. 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.
    9. Jith Jayaratne & Philip E. Strahan, 1996. "The Finance-Growth Nexus: Evidence from Bank Branch Deregulation," The Quarterly Journal of Economics, Oxford University Press, vol. 111(3), pages 639-670.
    10. Pagano, Marco, 1993. "Financial markets and growth: An overview," European Economic Review, Elsevier, vol. 37(2-3), pages 613-622, April.
    11. Levine, Ross, 1991. " Stock Markets, Growth, and Tax Policy," Journal of Finance, American Finance Association, vol. 46(4), pages 1445-1465, September.
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    Cited by:

    1. Raju Jan Singh & Yifei Huang, 2015. "Financial Deepening, Property Rights, and Poverty: Evidence from Sub-Saharan Africa," Journal of Banking and Financial Economics, University of Warsaw, Faculty of Management, vol. 1(3), pages 130-151, May.
    2. Kpodar, Kangni & Singh, Raju Jan, 2011. "Does financial structure matter for poverty ? evidence from developing countries," Policy Research Working Paper Series 5915, The World Bank.

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