Nabi, Mahmoud Sami and Rajhi, Taoufik (2005): Banking, Credit Market Imperfection and Growth.
Download (322kB) | Preview
We develop a new model that links capital market imperfection to banking emergence and economic growth. It is shown that the banking system emerges endogenously after a first stage of slow economic growth. Interestingly, economic growth increases after the emergence of banking but remains under its potential level. This is due to a credit rationing brake which decreases progressively as the economy develops. Another finding is that a reduction of credit market imperfection reduces the credit rationing stage.
|Item Type:||MPRA Paper|
|Original Title:||Banking, Credit Market Imperfection and Growth|
|Keywords:||endogenous growth, banking emergence, credit rationing, credit market imperfection|
|Subjects:||O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O16 - Financial Markets ; Saving and Capital Investment ; Corporate Finance and Governance
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||Mahmoud Sami NABI|
|Date Deposited:||19. Aug 2010 00:44|
|Last Modified:||16. Feb 2013 02:35|
• Aghion, P. and Bolton, P. (1997), "A Theory of Trickle-Down Growth and Development,," Review of Economic Studies, 64, 151-72.
• Beck, T., A. Demirgüç-Kunt, R. Levine and V. Maksimovic (2001), "Financial Structure and Economic Development: Firm, Industry, and Country Evidence," Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets and Development, Demirgüç-Kunt, Asli & Levine, Ross (eds), The MIT Press, Massachusetts.
• Bencivenga, V. R. and B.D. Smith (1993), "Some consequences of credit rationing in an endogenous growth model," Journal of Economic Dynamics and Control, 17, 97-122.
• Blackburn, K. and T. Y. Hung (1998), "A theory of growth, financial development and trade," Economica, 65, 107-124.
• Boyd, J. H. and Smith, B. D. (1996), "The Co-evolution of the Real and Financial Sectors in the Growth Process," World Bank Economic Review, 10, 371-396.
• Demetriades, P. O. and K. A. Hussein (1996), "Does financial development cause economic growth? Time-series evidence from 16 countries," Journal of Development Economics, 51, 387-411.
• Diamond, P. A.(1965), "National Debt in a Neoclassical Growth Model," American Economic Review, 55, 1126-1150.
• Jaffee, D. M. and T. Russell (1976), "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, 90(4), 651-66.
• Goldsmith, R.R. (1969), "Financial Structure and Development," Yale University Press, New Haven.
• Greenwood, J. and B. Jovanovic (1990), "Financial Development, Growth and the Distribution of Income," Journal of Political Economy, 98, 1076-1107.
• Gurley, J. and Shaw, E. (1955), "Financial Aspects of Economic Development," American Economic Review, 45 (Sept), 515-38.
• Laeven, L. and M. Giovanni (2005). "Does Judicial Efficiency Lower the Cost of Credit," Journal of Banking & Finance, 29, 1791-1812.
• Levine, R. (1998), "The legal Environment, Banks, and Long Run Economic Growth," Journal of Money, Credit and Banking, 30, 596-620
• Levine, R., N. Loayza and T. Beck (2000), Financial Intermediation and Growth: Causality and Causes," Journal of Monetary Economics, 46, 31-77
• Matsuyama, K. (2000), "Endogenous Inequality," Review of Economic Studies, 67, 743-759.
• Matsuyama, K. (2004), "Financial Market Globalization, Symmetry-Breaking and Endogenous Inequality of Nations," Econometrica, 72(3), 853-884.
• McKinnon, R.I. (1973), "Money and Capital in Economic Development," The Brooking Institute, Washington.
• Nabi, M.S. and M.O. Suliman (2009) "Institutions, Banking Development, And Economic Growth," The Developing Economies, Institute of Developing Economies, vol. 47(4), pages 436-457.
• Shan, J. , Z. Morris and A. Sun (2001), "Financial Development and Economic Growth: an Egg-and-Chicken Problem?," Review of International Economics, 9(3), 443-54.
• Shaw, E. (1973), "Financial Deepening in Economic Development," Oxford University Press.
• Stulz, R. (2001), "Does Financial Structure Matter for Economic Growth? A Corporate Finance Perspective", Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets and Development, Demirgüç-Kunt, Asli & Levine, Ross (eds), The MIT Press, Massachusetts.
• Tressel, T. (2003), "Dual Financial Systems and Inequalities in Economic Development," Journal of Economic Growth, 8 (2).
• World Bank (2007), World Bank Group Entrepreneurship Dataset, World Bank: Washington DC.
• World Bank (2006), World Development Indicators, World Bank: Washington DC.