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. 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. small and medium size enterprises (SMEs) and, 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. Nicola Cetorelli. 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. 2003). 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. 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? 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. and Zingales, L. (1998) Financial Dependence and Growth. Does finance affect economic growth? 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. See all articles by Stijn Claessens Stijn Claessens. The American Economic Review is a general-interest economics journal. This still suggests an important role for finance in the allocation of resources, but shifts the emphasis from "financial dependence" to "global growth opportunities." Cetorelli N, Gambera M. Banking market structure, financial dependence and growth: International evidence from industry data. Bank for International Settlements (BIS) ... Financial Dependence and Growth. 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 Search for more papers by this author. We show this result is unlikely to be driven by omitted variables, outliers, or reverse causality. 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 … We analyze data from 19 developed and developing countries that have experienced financial crises during the last Does finance affect economic growth? Semantic Scholar is a free, AI-powered research tool for scientific literature, based at the Allen Institute for AI. Request Permissions. 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…. Financial Dependence, Banking Sector Competition, and Economic Growth. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. All are professionals or graduate-level students dedicated to economics research and teaching. You are currently offline. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. 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? The Journal of Finance. 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 … 2001;56(2):617–48. The views ex-pressed in this paper are those of the authors and do not necessarily … 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 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. We re-examine their assumptions, and the robustness of their results to alternative theories and interpretations. 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. Check out using a credit card or bank account with. The law and finance literature has found that financial markets are better developed in countries with strong legal frameworks (La Porta et al. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. Does Inequality Matter in the Finance-Growth Nexus? Abstract. Raghuram Rajan and Luigi Zingales () American Economic Review, 1998, vol. 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). We find this to be true in a large sample of countries over the 1980's. The journal publishes 11 issues containing articles on a broad range of topics. Financial Dependence, Banking Sector Competition, and Economic Growth. As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. For terms and use, please refer to our Terms and Conditions Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. Abstract. JSTOR®, the JSTOR logo, JPASS®, Artstor®, Reveal Digital™ and ITHAKA® are registered trademarks of ITHAKA. 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. 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. No Access Policy Research Working Papers 21 Jun 2013. 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. 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. 1998; Beck et al. 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 development stimulates growth, in particular in industries dependent on external finance. Cetorelli, N. and Gamberra, M. (2001): “Banking market structure, financial dependence and growth: international evidence from industry data”, Journal of Finance 56, 617-648. FINANCIAL DEPENDENCE AND GROWTH ABSTRACT Does finance affect economic growth? of Chicago, the Finance Krishna Kumar, Canice Prendergast, and … As has been noted elsewhere, the observed correlation does not necessarily imply a causal relationship. LVI, NO. View Article Google Scholar 21. Nicola Cetorelli. Estimate for 16 countries an industrial organization-based measure of banking system competition finance literature found! 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