Financial Structure, Inequalities, and Growth

DELTA Working Papers from DELTA (Ecole normale supérieure)

Abstract: The model analyses the joint process of growth and financial institutions development. There are two markets for credit: the informal credit market, and banks. The informal credit market has an advantage in temr of monitoring capacity but becomes extremely costly for large scale projects. Banks cannot monitor entrepreneurs perfectly, hence the ;atter need to provide a collateral; but they can gather a large amounts of capital at a relatively low cost.

Keywords: MORAL HAZARD; BANKS; INCOME DISTRIBUTION (search for similar items in EconPapers)
JEL-codes: D31 D83 G21 (search for similar items in EconPapers)
Date: Written 1999

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