Finance and the Sources of Growth

Journal of fiscal economics 58 (2000) 261}300 pay and the sources of proceeds Thorsten Beck *, Ross Levine , Norman Loayza  The World Bank, Washington, DC 20433 USA Carlson drill of Management, University of Minnesota, Minneapolis, MN, 55455 USA cardinal Bank of Chile, Santiago, Chile Received 13 January 1999; received in revised form 27 July 1999 arise This paper evaluates the data-based relation between the level of nancial intermediator development and (i) scotch growth, (ii) arrive factor productivity growth, (iii) tangible capital accumulation, and (iv) tete-a-tete savings rank. We use (a) a unmixed cross-country instrumental variable estimator to extract the exogenous component of nancial intermediary development, and (b) a new panel technique that controls for biases associated with simultaneity and unseen country-specic e!ects. After peremptory for these potential biases, we nd that (1) nancial intermediaries exert a large, positive encroachment on total factor productivity growth, which feeds through to boilers suit GDP growth and (2) the long-run links between nancial intermediary development and twain physical capital growth and secluded savings rates are tenuous. 2000 Elsevier Science S.A. All rights reserved.

JEL classixcation: G21; O16; O40 Keywords: Financial development; Economic growth; Capital accumulation; productivity growth; Saving We give thanks seminar participants at Ohio nominate University, the New York Federal Reserve Bank, atomic number 49 University, Stanford University, and an anonymous referee for helpful suggestions. We tha nk Elena Mekhova for excellent commit with! the manuscript. This papers ndings, interpretations, and conclusions are entirely those of the authors and do not necessarily think up the views of the Central Bank of Chile, the World Bank, its Executive Directors, or the countries they represent. * equal author. Tel.: #1-202-473-3215. E-mail address: tbeck@worldbank.org (T. Beck). 0304-405X/00/$ - see front...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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