Banking, Credit Market Imperfection and Growth

Mahmoud Nabi and Taoufik Rajhi

MPRA Paper from University Library of Munich, Germany

Abstract: 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.

Keywords: endogenous growth; banking emergence; credit rationing; credit market imperfection (search for similar items in EconPapers)
JEL-codes: G21 O16 O41 (search for similar items in EconPapers)
Date: 2005, Revised 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:24495

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