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Luigi Zingales - One of the best experts on this subject based on the ideXlab platform.

  • does local Financial Development matter
    Quarterly Journal of Economics, 2004
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. We construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator, we find that Financial Development enhances the probability an individual starts his own business, favors entry of new firms, increases competition, and promotes growth. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. These effects are present even when we instrument our indicator with the structure of the local banking markets in 1936, which, because of regulatory reasons, affected the supply of credit in the following 50 years. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • Does Local Financial Development Matter
    SSRN Electronic Journal, 2003
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts his own business, favors entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • does local Financial Development matter
    National Bureau of Economic Research, 2002
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts their own business, favours entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

Luigi Guiso - One of the best experts on this subject based on the ideXlab platform.

  • does local Financial Development matter
    Quarterly Journal of Economics, 2004
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. We construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator, we find that Financial Development enhances the probability an individual starts his own business, favors entry of new firms, increases competition, and promotes growth. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. These effects are present even when we instrument our indicator with the structure of the local banking markets in 1936, which, because of regulatory reasons, affected the supply of credit in the following 50 years. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • Does Local Financial Development Matter
    SSRN Electronic Journal, 2003
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts his own business, favors entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • does local Financial Development matter
    National Bureau of Economic Research, 2002
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts their own business, favours entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

Anja Shortland - One of the best experts on this subject based on the ideXlab platform.

  • The Political Economy of Financial Development
    2008
    Co-Authors: Sourafel Girma, Anja Shortland
    Abstract:

    Political economy theories of Financial Development argue that in countries where a narrow elite controls political decisions, Financial Development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975–2000 to examine the effect of a country's democracy characteristics and regime change on Financial Development. Our results show that regime stability and democracy promote Financial Development, with additional benefits from fully democratic regimes.

  • The Political Economy of Financial Development
    Oxford Economic Papers, 2007
    Co-Authors: Sourafel Girma, Anja Shortland
    Abstract:

    Political economy theories of Financial Development argue that in countries where a narrow elite controls political decisions, Financial Development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975-2000 to examine this hypothesis, as well as looking at the effect of regime transitions on Financial Development. Our results show that the degree of democracy and political stability explain differences in the speed of Financial Development and that including these regime characteristics makes legal origin variables obsolete.

  • The Political Economy of Financial Development
    2004
    Co-Authors: Sourafel Girma, Anja Shortland
    Abstract:

    Political economy theories of Financial Development argue that in countries where a narrow elite controls political decisions, Financial Development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975- 2000 to examine this hypothesis, as well as looking at the effect of regime stability on Financial Development. Our results show that the degree of democracy and political stability are significant explanatory factors in determining the speed of Financial Development. The banking sector benefits from regime stability and increasing democracy, while stock market capitalisation grows fastest in fully democratic regimes.

  • The Political Economy of Financial Development
    2004
    Co-Authors: Sourafel Girma, Anja Shortland
    Abstract:

    Political economy theories of Financial Development argue that in countries where a narrow elite controls political decisions, Financial Development may be obstructed to deny access to finance to potential competitors. We use panel data on developed and developing countries from 1975-2000 to examine the effect of a country's democracy characteristics and regime change on Financial Development. Our results show that regime stability and democracy promote Financial Development, with additional benefits from fully democratic regimes. Copyright 2008 , Oxford University Press. (This abstract was borrowed from another version of this item.)

Andrei A. Levchenko - One of the best experts on this subject based on the ideXlab platform.

  • Comparative Advantage, Demand For External Finance, And Financial Development - Comparative advantage, demand for external finance, and Financial Development
    Journal of Financial Economics, 2007
    Co-Authors: Andrei A. Levchenko
    Abstract:

    The differences in the levels of Financial Development between industrial and developing countries are large and persistent. Theoretical and empirical literature has argued that these differences are the source of comparative advantage and could therefore shape trade patterns. This paper points out the reverse link: Financial Development is influenced by comparative advantage. The authors illustrate this idea using a model in which a country's Financial Development is an equilibrium outcome of the economy's productive structure: Financial systems are more developed in countries with large Financially intensive sectors. After trade opening demand for external finance, and therefore Financial Development, are higher in a country that specializes in Financially intensive goods. By contrast, Financial Development is lower in countries that primarily export goods which do not rely on external finance. The authors demonstrate this effect empirically using data on Financial Development and export patterns in a panel of 96 countries over the period 1970-99. Using trade data, they construct a summary measure of a country's external finance need of exports and relate it to the level of Financial Development. In order to overcome the simultaneity problem, they adopt a strategy in the spirit of Frankel and Romer (1999). The authors exploit sector-level bilateral trade data to construct, for each country and time period, a predicted value of external finance need of exports based on the estimated effect of geography variables on trade volumes across sectors. Their results indicate that Financial Development is an equilibrium outcome that depends strongly on a country's trade pattern.

  • Trade and Financial Development - Trade and Financial Development
    Policy Research Working Papers, 2004
    Co-Authors: Andrei A. Levchenko
    Abstract:

    The differences in Financial Development between advanced and developing countries are pronounced. It has been observed, both theoretically and empirically, that these differences in countries' Financial systems are a source of comparative advantage and trade. This paper points out that to the extent a country's Financial Development is endogenous, it will in turn be influenced by trade. The paper builds a model in which a country's Financial Development is an equilibrium outcome of the economy's productive structure: in countries with large Financially intensive sectors Financial systems are more developed. When a wealthy and a poor country open to trade, the Financially dependent sectors grow in the wealthy country, and so does the Financial system. By contrast, as the Financially intensive sectors shrink in the poor country, demand for external finance decreases and the domestic Financial system deteriorates. This paper describes the authors' test model using data on Financial Development for a sample of 77 countries. The authors find that the main predictions of the model are borne out in the data: trade openness is associated with faster Financial Development in wealthier countries, and with slower Financial Development in poorer ones.

  • Trade and Financial Development
    2004
    Co-Authors: Andrei A. Levchenko
    Abstract:

    The differences in Financial Development between advanced and developing countries are pronounced. It has been observed, both theoretically and empirically, that these differences in countries'Financial systems are a source of comparative advantage and trade. This paper points out that to the extent a country's Financial Development is endogenous, it will in turn be influenced by trade. The paper builds a model in which a country's Financial Development is an equilibrium outcome of the economy's productive structure: in countries with large Financially intensive sectors Financial systems are more developed. When a wealthy and a poor country open to trade, the Financially dependent sectors grow in the wealthy country, and so does the Financial system. By contrast, as the Financially intensive sectors shrink in the poor country, demand for external finance decreases and the domestic Financial system deteriorates. This paper describes the authors'test model using data on Financial Development for a sample of 77 countries. The authors find that the main predictions of the model are borne out in the data: trade openness is associatedwith faster Financial Development in wealthier countries, and with slower Financial Development in poorer ones.

Paola Sapienza - One of the best experts on this subject based on the ideXlab platform.

  • does local Financial Development matter
    Quarterly Journal of Economics, 2004
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. We construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator, we find that Financial Development enhances the probability an individual starts his own business, favors entry of new firms, increases competition, and promotes growth. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. These effects are present even when we instrument our indicator with the structure of the local banking markets in 1936, which, because of regulatory reasons, affected the supply of credit in the following 50 years. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • Does Local Financial Development Matter
    SSRN Electronic Journal, 2003
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts his own business, favors entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.

  • does local Financial Development matter
    National Bureau of Economic Research, 2002
    Co-Authors: Luigi Guiso, Paola Sapienza, Luigi Zingales
    Abstract:

    We study the effects of differences in local Financial Development within an integrated Financial market. To do so, we construct a new indicator of Financial Development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator we find that Financial Development enhances the probability an individual starts their own business, favours entry, increases competition, and promotes growth of firms. As predicted by theory, these effects are weaker for larger firms, which can more easily raise funds outside of the local area. Overall, the results suggest local Financial Development is an important determinant of the economic success of an area even in an environment where there are no frictions to capital movements.