Financial Development and Growth in the Short and Long Run
The authors analyze the relationship
between financial development and inter-industry resource
allocation in the short and long run. They suggest that in
the long run, economies with high rates of financial
development will devote relatively more resources to
industries with a "natural" reliance on outside
finance due to a comparative advantage in these industries.
By contrast, in the short run the authors argue that
financial development facilitates the reallocation of
resources to industries with good growth opportunities,
regardless of their reliance on outside finance. To test
these predictions, they use a measure of industry-level
"technological" financial dependence based on the
earlier work of Rajan and Zingales (1998) and develop new
proxies for shocks to (short-run) industry growth
opportunities. The authors find differential effects of
these measures on industry growth and composition in
countries with different levels of financial development.
They obtain results that are consistent with financially
developed economies specializing in "financially
dependent" industries in the long run, and allocating
resources to industries with high growth opportunities in
the short run.
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Bibliographic Details
Main Authors: |
Fisman, Raymond,
Love, Inessa |
Language: | English en_US |
Published: |
World Bank, Washington, D.C.
2004-05
|
Subjects: | AUGMENTATION,
AVERAGE GROWTH,
AVERAGE GROWTH RATE,
BANK MONITORING,
CAPITAL EXPENDITURES,
CAPITAL MARKETS,
COMPARATIVE ADVANTAGE,
COUNTRY SPECIFIC,
DESCRIPTIVE STATISTICS,
DEVELOPING COUNTRIES,
DIVERSIFICATION,
DOMESTIC CREDIT,
ECONOMIC ACTIVITY,
ECONOMIC DEVELOPMENT,
ECONOMIC GROWTH,
ECONOMIC LITERATURE,
ECONOMICS,
FACTOR PRICES,
FINANCIAL DEVELOPMENT,
FINANCIAL INSTITUTIONS,
FINANCIAL MARKETS,
FUNCTIONAL FORM,
GROWTH PROSPECTS,
GROWTH RATES,
GROWTH REGRESSION,
GROWTH REGRESSIONS,
HIGH GROWTH,
HUMAN CAPITAL,
INCOME,
INTERMEDIARIES,
IRON,
LEGAL ORIGIN,
LONG RUN,
MARKET CAPITALIZATION,
MONETARY ECONOMICS,
MORAL HAZARD,
MORTALITY,
PETROLEUM REFINERIES,
POLICY RESEARCH,
PRODUCTIVITY,
PROMOTING GROWTH,
PROPERTY RIGHTS,
RESOURCE ALLOCATION,
SHORT-RUN GROWTH,
SIGNIFICANT IMPACT,
SKILLED LABOR,
SKILLED WORKERS,
STANDARD DEVIATION,
TRADE FLOWS CAPITAL MARKETS,
CASH FLOWS,
CASH GENERATION,
EFFICIENT RESOURCE ALLOCATION,
EXTERNAL FINANCING,
FINANCIAL INTERMEDIARIES,
FINANCIAL MARKET DEVELOPMENT, |
Online Access: | http://documents.worldbank.org/curated/en/2004/05/4973127/financial-development-growth-short-long-run
https://hdl.handle.net/10986/14025
|
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