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. Abstract. 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. option. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship: that financial development reduces the costs of … For terms and use, please refer to our Terms and Conditions View Article Google Scholar 21. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality. 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. Raghuram Rajan and Luigi Zingales () American Economic Review, 1998, vol. 2003). 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. Cetorelli N, Gambera M. Banking market structure, financial dependence and growth: International evidence from industry data. We re-examine their assumptions, and the robustness of their results to alternative theories and interpretations. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. 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. 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. Financial Dependence and Growth. 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. Check out using a credit card or bank account with. 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? We revisit an earlier, highly influential paper on financial dependence and growth by Rajan and Zingales (1998). Moreover, measuring competition in the financial sector can be complex. 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. 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. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. 3481. 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. and Zingales, L. (1998) Financial Dependence and Growth. Financial Dependence, Banking Sector Competition, and Economic Growth. Nicola Cetorelli. 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. Access supplemental materials and multimedia. 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. LVI, NO. No Access Policy Research Working Papers 21 Jun 2013. 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: 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. By Raghuram G. Rajan and Luigi Zingales. This item is part of JSTOR collection of Chicago, the Finance Krishna Kumar, Canice Prendergast, and … More>> Rajan, R.G. The journal publishes 11 issues containing articles on a broad range of topics. 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. Does finance affect economic growth? 1998; Beck et al. 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. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Does finance affect economic growth? Bank for International Settlements (BIS) ... Financial Dependence and Growth. Does Inequality Matter in the Finance-Growth Nexus? Does finance affect economic growth? You are currently offline. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." 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. 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. Semantic Scholar is a free, AI-powered research tool for scientific literature, based at the Allen Institute for AI. The law and finance literature has found that financial markets are better developed in countries with strong legal frameworks (La Porta et al. The American Economic Review is a general-interest economics journal. Home Policy Research Working Papers Financial Dependence, Banking Sector Competition, and Economic Growth. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Some features of the site may not work correctly. 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. Di Patti EB, Dell'Ariccia G. Bank competition and firm creation. Select the purchase 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 is at the Federal Reserve Bank of Chicago and Gambera is at Morningstar, Inc. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Read your article online and download the PDF from your email or your account. The views ex-pressed in this paper are those of the authors and do not necessarily … ©2000-2020 ITHAKA. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. THE JOURNAL OF FINANCE * VOL. 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. 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. 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. Request Permissions. 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. Financial development stimulates growth, in particular in industries dependent on external finance. 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. 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. Abstract. See all articles by Stijn Claessens Stijn Claessens. All are professionals or graduate-level students dedicated to economics research and teaching. 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. Financial dependence and growth since the crisis (1) Volume 12 No 3 | 7 I.1. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. 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? In this paper we first estimate for 16 countries an industrial organization-based measure of banking system competition. 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 … Article citations. 49 Pages Posted: 1 Feb 2005. 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. Financial Dependence, Banking Sector Competition, and Economic Growth. I. Shyn, Yong-Sang.November, 2005.Financial dependence, growth opportunities, and industrial growth in Korea,Report,[Seoul]Korea Institute of Finance,31 The American Economic Review We analyze data from 19 developed and developing countries that have experienced financial crises during the last Cetorelli, N. and Gamberra, M. (2001): “Banking market structure, financial dependence and growth: international evidence from industry data”, Journal of Finance 56, 617-648. ... 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). As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Search for more papers by this author. This paper examines whether financial development facilitates economic growth by scrutinizing one rationale for such a relationship; that financial development reduces the costs of…. 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