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Financial Intermediation and Growth: Causality and Causes

Thorsten Beck (), Ross Levine () and Norman V. Loayza ()

Working Papers Central Bank of Chile from Central Bank of Chile

Abstract: This paper evaluates (1) whether the exogenous component of financial intermediary development influences economic growth and (2) whether cross-country differences in legal and accounting systems (e.g., creditor rights, contract enforcement, and accounting standards) explain differences in the level of financial development. Using both traditional cross-section, instrumental variable procedures and recent dynamic panel techniques, we find that the exogenous component of financial intermediary development is positively associated with economic growth. Also, the data show that cross-country differences in legal and accounting systems help account for differences in financial development. Together, these findings suggest that legal and accounting reforms that strengthen creditor rights, contract enforcement, and accounting practices can boost financial development and accelerate economic growth.

New Economics Papers: this item is included in nep-dev, nep-mfd and nep-pke
Date: 1999-12
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Related works:
Chapter: Financial Intermediation and Growth: Causality and Causes (2002) Downloads
Journal Article: Financial intermediation and growth: Causality and causes (2000) Downloads
Working Paper: Financial intermediation and growth: Causality and causes (2000) Downloads
Working Paper: Financial intermediation and growth: Causality and causes (1999) Downloads
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