Financial intermediation and employment

Manoj Pant, Prabal Roy Chowdhury () and Gurbachan Singh
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Manoj Pant: Jawaharlal Nehru University
Gurbachan Singh: Jawaharlal Nehru University

Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers from Indian Statistical Institute, New Delhi, India

Abstract: This paper explores the relationship between financial intermediation and employment. We explain why some economies have low financial intermediation even when financial intermediation is safe. Moreover, we seek to explain why these economies tend to be poor and vulnerable, and also have large self-employment even when the latter has low productivity. We model safe but unsound banks and show that the effects of bad banking can be overcome only partially by corrective taxes. The model is extended to incorporate the illegal sector of the economy as well as the labor laws.

Keywords: Financial intermediation; self-employment; tax; labor laws (search for similar items in EconPapers)
JEL-codes: G20 J23 O17 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-ent and nep-mfd
Date: 2004-06
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Persistent link: http://EconPapers.repec.org/RePEc:ind:isipdp:04-22

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