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New empirical evidence on local financial development and growth

Andrea Vaona and Roberto Patuelli ()

Quaderni della facoltà di Scienze economiche dell'Università di Lugano from USI Università della Svizzera italiana

Abstract: In this paper, we show that the regional finance-growth nexus in Italy is robust to a series of innovations with respect to the existing literature on the topic. We use finer measures of economic and financial development, as well as instruments with a deeper economic content. We rely on state-of-the-art cross-sectional and panel estimation methods, and we offer a thorough investigation of the nonlinearities in the relation between finance and growth. Our results show that, while local financial development is a key factor for economic growth, in regions with inefficient courts more credit might translate into reduced growth due to opportunistic behaviour and the consequent misallocation of funds.

Keywords: Finance; Growth; Regions; Italy; Cross-Section Analysis; Panel Data Analysis (search for similar items in EconPapers)
JEL-codes: C31 O16 O18 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2008-05-13
New Economics Papers: this item is included in nep-dev, nep-eff, nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:lug:wpaper:0805

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