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 r...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, D.C.
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2004/05/4973127/financial-development-growth-short-long-run http://hdl.handle.net/10986/14025 |
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okr-10986-140252021-04-23T14:03:21Z Financial Development and Growth in the Short and Long Run Fisman, Raymond Love, Inessa 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 DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKET DEVELOPMENT INTERMEDIARIES RESOURCE ALLOCATION 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. 2013-06-19T19:06:51Z 2013-06-19T19:06:51Z 2004-05 http://documents.worldbank.org/curated/en/2004/05/4973127/financial-development-growth-short-long-run http://hdl.handle.net/10986/14025 English en_US Policy Research Working Paper;No.3319 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, D.C. Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
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 DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKET DEVELOPMENT INTERMEDIARIES RESOURCE ALLOCATION |
| spellingShingle |
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 DEVELOPMENT FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIARIES FINANCIAL MARKET DEVELOPMENT INTERMEDIARIES RESOURCE ALLOCATION Fisman, Raymond Love, Inessa Financial Development and Growth in the Short and Long Run |
| relation |
Policy Research Working Paper;No.3319 |
| description |
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. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Fisman, Raymond Love, Inessa |
| author_facet |
Fisman, Raymond Love, Inessa |
| author_sort |
Fisman, Raymond |
| title |
Financial Development and Growth in the Short and Long Run |
| title_short |
Financial Development and Growth in the Short and Long Run |
| title_full |
Financial Development and Growth in the Short and Long Run |
| title_fullStr |
Financial Development and Growth in the Short and Long Run |
| title_full_unstemmed |
Financial Development and Growth in the Short and Long Run |
| title_sort |
financial development and growth in the short and long run |
| publisher |
World Bank, Washington, D.C. |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2004/05/4973127/financial-development-growth-short-long-run http://hdl.handle.net/10986/14025 |
| _version_ |
1764430377660710912 |