The Impact of Financial Intermediaries on Resource Allocation and Economic Growth

Philip Lowe
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Philip Lowe: Reserve Bank of Australia

RBA Research Discussion Papers from Reserve Bank of Australia

Abstract: This paper examines the links between economic growth and the nature of a country’s financial system. It is argued that long-run growth has its roots in resource accumulation, and in particular in knowledge accumulation. The financial system plays an important role in influencing both the amount and type of resource accumulation which actually takes place. In particular, financial market regulation distorts the incentives of financial intermediaries which, in turn, distorts the type of resource accumulation that takes place. It is also argued that the size of the gains derived from the development of the financial sector rests heavily on the ability of intermediaries to effectively screen and monitor lending proposals. Finally, the paper explores some of the implications of Australia’s financial market liberalisation.

Date: 1992-12
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Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp9213

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