The journal publishes 11 issues containing articles on a broad range of topics. The American Economic Review CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of external finance to firms. 1998; Beck et al. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Michele Gambera. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. In this note, we revisit an earlier, highly influential paper on Financial Dependence and Growth by Rajan and Zingales (1998), by re-examining their assumptions, and the robustness of their results to alternative theories and interpretations. The American Economic Review, 88, 559-586. has been cited by the following article: TITLE: Can the Construction of Social Credit System Alleviate the Influence of Financing Constraints on the Growth of Enterprises? Evidence from a Sample of Middle Income Countries, Does too much finance harm economic growth, The nonlinear relationship between economic growth and financial development: Evidence from developing, emerging and advanced economies, The financial sector and economic growth in a panel of countries, Financial Development and Economic Growth: A Meta-Analysis, DOES FINANCIAL MARKET DEVELOPMENT MATTER IN EXPLAINING GROWTH FLUCTUATIONS, Financial Development, Growth, and the Distribution of Income, Finance and Growth: Schumpeter Might Be Right, Financial markets and growth: An overview☆, The Finance-Growth Nexus: Evidence from Bank Branch Deregulation, A Sensitivity Analysis of Cross-Country Growth Regressions, The Coevolution of the Real and Financial Sectors in the Growth Process, Good Policy or Good Luck? Country Growth Performance and Temporary Shocks, Domestic Saving and International Capital Flows Reconsidered, View 2 excerpts, cites results and methods, By clicking accept or continuing to use the site, you agree to the terms outlined in our. In this paper we first estimate for 16 countries an industrial organization-based measure of banking system competition. Once composed primarily of college and university professors in economics, the American Economic Association (AEA) now attracts 20,000+ members from academe, business, government, and consulting groups within diverse disciplines from multi-cultural backgrounds. In this paper we show that more efficient banks are particularly important in stimulating both output and productivity growth, while traditional volume measures of finance are much less important for productivity growth. Access supplemental materials and multimedia. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. World Bank Policy Research Working Paper No. Search for more papers by this author. All Rights Reserved. Does finance affect economic growth? As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. The financial development and growth literature has established that finance matters for growth both at the macroeconomic and microeconomic levels (King and Levine 1993). Nicola Cetorelli. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." The basic specification in this paper is a semiparametric growth rate function where the interaction between external financial dependence of an industry and financial development of a country enters nonparametrically and the remaining variables are parametric. The threshold of the ratio between private credit and GDP above which the contribution of a further expansion of credit to industry growth is negative depends on the degree of industries’ own and upstream financial dependence values and slightly varies across sectors, ranging from 89% to 87%, with higher thresholds observed for sectors with lower own financial dependence but higher upstream … Does Inequality Matter in the Finance-Growth Nexus? This paper examines whether nancial development facilitates economic growth by scrutinizing one rationale for such a relationship; that nancial development reduces the costs of external nance to rms. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Home Policy Research Working Papers Financial Dependence, Banking Sector Competition, and Economic Growth. Abstract. This item is part of JSTOR collection A number of studies have identified a positive correlation between the level of development of a country’s financial sector and the rate of growth of its per capita income. Abstract: Does finance affect economic growth? of Chicago, the Finance Krishna Kumar, Canice Prendergast, and … 2003). Established in 1911, the AER is among the nation's oldest and most respected scholarly journals in the economics profession and is celebrating over 100 years of publishing. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. I. Article citations. By Raghuram G. Rajan and Luigi Zingales. © 1998 American Economic Association A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. Select the purchase Check out using a credit card or bank account with. We revisit an earlier, highly influential paper on financial dependence and growth by Rajan and Zingales (1998). 88, issue 3, 559-86 Abstract: This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of external finance to firms. JSTOR is part of ITHAKA, a not-for-profit organization helping the academic community use digital technologies to preserve the scholarly record and to advance research and teaching in sustainable ways. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper examines whether nancial development facilitates economic growth by scrutinizing one rationale for such a relationship; that nancial development reduces the costs of external nance to rms. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Financial Dependence and Growth. Specifically, we ask whether industrial sectors that are relatively more in need of external finance develop disproportionately faster in countries with more-developed financial markets. 3481. The American Economic Review is a general-interest economics journal. Introduction The global financial crisis has deeply affected the growth and finance nexus via several channels, including wide-scale private deleveraging, tighter credit constraints for some economic agents, e.g. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. For terms and use, please refer to our Terms and Conditions Semantic Scholar is a free, AI-powered research tool for scientific literature, based at the Allen Institute for AI. In this note, we revisit an earlier, highly influential paper on Financial Dependence and Growth by Rajan and Zingales (1998), by re-examining their assumptions, and the robustness of their results to alternative theories and interpretations. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. We analyze data from 19 developed and developing countries that have experienced financial crises during the last Financial Dependence and Growth: Diminishing Returns to Improvement in Financial Development Leilei Shen Kansas State University April 7, 2013 Abstract This paper examines how much nancial development facilitates economic growth by nonpara-metrically estimating the e ect of nancial development on reducing the costs of external nance to rms. Abstract. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. The views ex-pressed in this paper are those of the authors and do not necessarily … This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." ... Stephan Luck, The Effects of Banking Competition on Growth and Financial Stability: Evidence from the National Banking Era, SSRN Electronic Journal, 10.2139/ssrn.3202489, (2018). Financial Dependence and Growth By RAGHURAM G. RAJAN AND LUIGI ZINGALES * This paper examines whetherfinancial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of … Financial Dependence, Stock Market Liberalizations, and Growth Nandini Gupta and Kathy Yuan∗ January 2002 Abstract Stock market liberalizations provide a natural experiment to test for the causal relation between financial development and economic Financial dependence and growth since the crisis (1) Volume 12 No 3 | 7 I.1. 2 * APRIL 2001 Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data NICOLA CETORELLI and MICHELE GAMBERA* ABSTERACT This paper explores the empirical relevance of banking market structure on growth. Published By: American Economic Association, Access everything in the JPASS collection, Download up to 10 article PDFs to save and keep, Download up to 120 article PDFs to save and keep. The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. We widen the understanding of the finance-growth nexus by accounting for the indirect effect of financial development through input-output (IO) linkages in determining the growth of industries across countries. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Some features of the site may not work correctly. LVI, NO. Financial Dependence, Banking Sector Competition, and Economic Growth. You are currently offline. Financial Crises, Financial Dependence, and Industry Growth Luc Laeven, Daniela Klingebiel, and Randy Kroszner** Abstract This paper investigates the linkage between financial crises and industry growth. small and medium size enterprises (SMEs) and, This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of…. NBER WO~G PAPER SERIES FINANCIAL DEPENDENCE AND GROWTH Raghuram G. Rajan Luigi Zingales Working Paper 5758 NATIONAL BUREAU OF ECONOMIC Avenue MA 02138 1996 RESEARCH 1050 Massachusetts Cambridge, September We thank Gene Fama, Peter Klenow, David Scharfstein, Robert Vishny, University comments. FINANCIAL DEPENDENCE AND GROWTH ABSTRACT Does finance affect economic growth? No Access Policy Research Working Papers 21 Jun 2013. Di Patti EB, Dell'Ariccia G. Bank competition and firm creation. Does finance affect economic growth? Abstract. Cetorelli is at the Federal Reserve Bank of Chicago and Gambera is at Morningstar, Inc. We find this to be true in a large sample of countries over the 1980's. View Article Google Scholar 21. A number of studies have identified a positive correlation between the level of development of a country's financial sector and the rate of growth of its per capita income. Cetorelli, N. and Gamberra, M. (2001): “Banking market structure, financial dependence and growth: international evidence from industry data”, Journal of Finance 56, 617-648. Read your article online and download the PDF from your email or your account. Bank for International Settlements (BIS) ... Financial Dependence and Growth. Moreover, measuring competition in the financial sector can be complex. We re-examine their assumptions, and the robustness of their results to alternative theories and interpretations. The Journal of Finance. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of external finance to firms. 49 Pages Posted: 1 Feb 2005. See all articles by Stijn Claessens Stijn Claessens. Cetorelli N, Gambera M. Banking market structure, financial dependence and growth: International evidence from industry data. Chakraborty, Atreya and Charles X. Hu (2006): “Lending relationships in line-of-credit and nonline-of-credit loans: evidence from collateral use in small business”, Journal of Financial Intermediation, forthcoming. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of … Financial Dependence and Growth . The role of the financial sector in economic growth, The dynamics of finance-growth nexus in advanced economies, Is the Relationship between Financial Development and Economic Growth Monotonic? We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality. More>> Rajan, R.G. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data Nicola Cetorelli1 Michele Gambera October 1999 1Federal Reserve Bank of Chicago, 230 S. LaSalle St., Chicago, IL 60604-1413.E-mail: ncetorelli@frbchi.org and Michele.Gambera@chi.frb.org, respectively. ©2000-2020 ITHAKA. Shyn, Yong-Sang.November, 2005.Financial dependence, growth opportunities, and industrial growth in Korea,Report,[Seoul]Korea Institute of Finance,31 Request Permissions. Does finance affect economic growth? All are professionals or graduate-level students dedicated to economics research and teaching. and Zingales, L. (1998) Financial Dependence and Growth. Raghuram Rajan and Luigi Zingales () American Economic Review, 1998, vol. Financial Dependence, Banking Sector Competition, and Economic Growth. Nicola Cetorelli. This paper provides evidence that bank concentration promotes the growth of those industrial sectors that are more in need of external finance by facilitating credit access to younger firms. 2001;56(2):617–48. The law and finance literature has found that financial markets are better developed in countries with strong legal frameworks (La Porta et al. Financial development stimulates growth, in particular in industries dependent on external finance. option. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. Does finance affect economic growth? THE JOURNAL OF FINANCE * VOL. , Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA this to be by... Among competition in the financial Sector, access of firms to external financing, and Economic Growth ambiguous... 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