Local Financial Development and Growth
Using a unique sample of net domestic product data for districts in India, I investigate the connection between banking sector development, human capital, and economic growth at the sub-national level. Using disaggregate data avoids many of the omi...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090213151623 http://hdl.handle.net/10986/4034 |
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okr-10986-4034 |
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| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ADULT ILLITERACY AGRICULTURE AUTONOMY BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BANK BALANCE SHEET BANK BRANCH BANK CREDIT BANK DEPOSIT BANKING INDUSTRY BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTOR OUTREACH BANKING SECTORS BANKING SYSTEM BOND BOND MARKETS BORROWER BORROWING BRANCH BANKING CALCULATIONS CAPITAL ACCUMULATION CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CHECKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS CONTRACTUAL SAVINGS CONTRIBUTION CONTRIBUTIONS CORRUPTION CREDIT MARKET CREDIT MARKETS CREDITOR DEMAND CURVES DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNTS DEPOSIT SERVICES DEPOSITS DEPRECIATION DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISTRIBUTION OF INCOME DISTRICT GOVERNMENTS DOMESTIC CAPITAL ECONOMETRICS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STRUCTURES ECONOMIC THEORY ENDOGENOUS VARIABLES ENROLLMENT ENTREPRENEUR ENTREPRENEURS EXTENSION OF CREDIT EXTERNAL FUNDS FAVORABLE TERMS FINANCIAL ACCESS FINANCIAL CAPACITY FINANCIAL CONSTRAINT FINANCIAL CONSTRAINTS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL REGULATIONS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEM FIXED COSTS FOREIGN BANKS FORMAL ECONOMY FORMAL FINANCE FORMAL LENDING FUTURE CREDIT FUTURE GROWTH GDP GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH MODELS GROWTH RATE GROWTH THEORY HOLDING HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT INCOME LEVELS INDIVIDUAL ACCESS INDUSTRIALIZATION INFLATION INFORMAL ECONOMY INSTRUMENT INSTRUMENTS FOR CREDIT INTERNATIONAL BANK INTERNATIONAL CAPITAL INVESTABLE FUNDS INVESTMENT OPPORTUNITIES LEGAL CONSTRAINT LEGAL PROTECTIONS LEGAL SYSTEM LENDER LOAN LOANABLE FUNDS LOCAL BANKS LOCAL ECONOMY LOCAL GOVERNMENT LOCAL SAVINGS MACROECONOMIC STABILITY MACROECONOMIC VARIABLES MARGINAL PRODUCT MARGINAL PROPENSITY TO SAVE MARKET DEVELOPMENT MARKET SEGMENTATION MEDIUM ENTERPRISES MONEY MARKET MONEY SUPPLY MORAL HAZARD NATIONAL ECONOMIES NDP NET DOMESTIC PRODUCT OPEN ECONOMIES OPEN ECONOMY ORIGINAL INSTRUMENTS PER CAPITA INCOME PHYSICAL CAPITAL POLITICAL ECONOMY PRIMARY EDUCATION PRIVATE CREDIT PROBABILITY PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPENSITY TO SAVE PUBLIC GOOD RAPID GROWTH RATE OF GROWTH REAL INCOME RESERVE RESERVE BANK RESERVE BANK OF INDIA RESERVE REQUIREMENTS RETURNS SAVINGS SECURITIES SECURITIES LAW SMALL BUSINESS SMALL BUSINESS BORROWERS SMALL BUSINESS LENDING SOCIAL BANKING STOCK MARKET STOCK MARKET DEVELOPMENT STOCK MARKETS SUPPLY CURVES SUPPLY OF CREDIT TRANSPORT VALUABLE VILLAGE VILLAGES |
| spellingShingle |
ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ADULT ILLITERACY AGRICULTURE AUTONOMY BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BANK BALANCE SHEET BANK BRANCH BANK CREDIT BANK DEPOSIT BANKING INDUSTRY BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTOR OUTREACH BANKING SECTORS BANKING SYSTEM BOND BOND MARKETS BORROWER BORROWING BRANCH BANKING CALCULATIONS CAPITAL ACCUMULATION CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CHECKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS CONTRACTUAL SAVINGS CONTRIBUTION CONTRIBUTIONS CORRUPTION CREDIT MARKET CREDIT MARKETS CREDITOR DEMAND CURVES DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNTS DEPOSIT SERVICES DEPOSITS DEPRECIATION DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISTRIBUTION OF INCOME DISTRICT GOVERNMENTS DOMESTIC CAPITAL ECONOMETRICS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STRUCTURES ECONOMIC THEORY ENDOGENOUS VARIABLES ENROLLMENT ENTREPRENEUR ENTREPRENEURS EXTENSION OF CREDIT EXTERNAL FUNDS FAVORABLE TERMS FINANCIAL ACCESS FINANCIAL CAPACITY FINANCIAL CONSTRAINT FINANCIAL CONSTRAINTS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL REGULATIONS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEM FIXED COSTS FOREIGN BANKS FORMAL ECONOMY FORMAL FINANCE FORMAL LENDING FUTURE CREDIT FUTURE GROWTH GDP GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH MODELS GROWTH RATE GROWTH THEORY HOLDING HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT INCOME LEVELS INDIVIDUAL ACCESS INDUSTRIALIZATION INFLATION INFORMAL ECONOMY INSTRUMENT INSTRUMENTS FOR CREDIT INTERNATIONAL BANK INTERNATIONAL CAPITAL INVESTABLE FUNDS INVESTMENT OPPORTUNITIES LEGAL CONSTRAINT LEGAL PROTECTIONS LEGAL SYSTEM LENDER LOAN LOANABLE FUNDS LOCAL BANKS LOCAL ECONOMY LOCAL GOVERNMENT LOCAL SAVINGS MACROECONOMIC STABILITY MACROECONOMIC VARIABLES MARGINAL PRODUCT MARGINAL PROPENSITY TO SAVE MARKET DEVELOPMENT MARKET SEGMENTATION MEDIUM ENTERPRISES MONEY MARKET MONEY SUPPLY MORAL HAZARD NATIONAL ECONOMIES NDP NET DOMESTIC PRODUCT OPEN ECONOMIES OPEN ECONOMY ORIGINAL INSTRUMENTS PER CAPITA INCOME PHYSICAL CAPITAL POLITICAL ECONOMY PRIMARY EDUCATION PRIVATE CREDIT PROBABILITY PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPENSITY TO SAVE PUBLIC GOOD RAPID GROWTH RATE OF GROWTH REAL INCOME RESERVE RESERVE BANK RESERVE BANK OF INDIA RESERVE REQUIREMENTS RETURNS SAVINGS SECURITIES SECURITIES LAW SMALL BUSINESS SMALL BUSINESS BORROWERS SMALL BUSINESS LENDING SOCIAL BANKING STOCK MARKET STOCK MARKET DEVELOPMENT STOCK MARKETS SUPPLY CURVES SUPPLY OF CREDIT TRANSPORT VALUABLE VILLAGE VILLAGES Kendall, Jake Local Financial Development and Growth |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 4838 |
| description |
Using a unique sample of net domestic
product data for districts in India, I investigate the
connection between banking sector development, human
capital, and economic growth at the sub-national level.
Using disaggregate data avoids many of the omitted variable
problems that plague cross-country studies of the
finance-growth connection and facilitates an instrumentation
strategy. The findings show that the growth of many
districts in India is financially constrained due to lack of
banking sector development, and that the relationship
between finance and growth may be non-linear. For the
districts in the sample, moving from the 75th percentile of
credit/net domestic product to the 25th percentile implies
an average loss of 4 percent in growth over the 1990s. This
indicates that the gains from increased banking sector
outreach may be large. The analysis shows that human capital
deepening can reduce the effect of the financial constraint
and help decouple growth from financial development. In a
district at the 25th literacy percentile, the implied growth
loss due to a constrained banking sector is twice as large
as in a district at the 75th literacy percentile. Thus,
higher levels of human capital may activate alternative
growth and production channels that are less finance intensive. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Kendall, Jake |
| author_facet |
Kendall, Jake |
| author_sort |
Kendall, Jake |
| title |
Local Financial Development and Growth |
| title_short |
Local Financial Development and Growth |
| title_full |
Local Financial Development and Growth |
| title_fullStr |
Local Financial Development and Growth |
| title_full_unstemmed |
Local Financial Development and Growth |
| title_sort |
local financial development and growth |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090213151623 http://hdl.handle.net/10986/4034 |
| _version_ |
1764389604503322624 |
| spelling |
okr-10986-40342021-04-23T14:02:14Z Local Financial Development and Growth Kendall, Jake ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ADULT ILLITERACY AGRICULTURE AUTONOMY BALANCE OF PAYMENTS BALANCE OF PAYMENTS CRISIS BALANCE SHEET BANK BALANCE SHEET BANK BRANCH BANK CREDIT BANK DEPOSIT BANKING INDUSTRY BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SECTOR OUTREACH BANKING SECTORS BANKING SYSTEM BOND BOND MARKETS BORROWER BORROWING BRANCH BANKING CALCULATIONS CAPITAL ACCUMULATION CAPITAL FLOWS CAPITAL MARKETS CENTRAL BANK CHECKS COLLATERAL COMMERCIAL BANK COMMERCIAL BANK CREDIT COMMERCIAL BANKS CONTRACTUAL SAVINGS CONTRIBUTION CONTRIBUTIONS CORRUPTION CREDIT MARKET CREDIT MARKETS CREDITOR DEMAND CURVES DEMAND FOR CREDIT DEPOSIT DEPOSIT ACCOUNTS DEPOSIT SERVICES DEPOSITS DEPRECIATION DEREGULATION DEVELOPING COUNTRIES DEVELOPING COUNTRY DEVELOPMENT ECONOMICS DISTRIBUTION OF INCOME DISTRICT GOVERNMENTS DOMESTIC CAPITAL ECONOMETRICS ECONOMIC ACTIVITIES ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC HISTORY ECONOMIC PERFORMANCE ECONOMIC REFORM ECONOMIC STRUCTURES ECONOMIC THEORY ENDOGENOUS VARIABLES ENROLLMENT ENTREPRENEUR ENTREPRENEURS EXTENSION OF CREDIT EXTERNAL FUNDS FAVORABLE TERMS FINANCIAL ACCESS FINANCIAL CAPACITY FINANCIAL CONSTRAINT FINANCIAL CONSTRAINTS FINANCIAL DEPTH FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL MARKETS FINANCIAL REGULATIONS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL SYSTEM FIXED COSTS FOREIGN BANKS FORMAL ECONOMY FORMAL FINANCE FORMAL LENDING FUTURE CREDIT FUTURE GROWTH GDP GLOBALIZATION GROSS DOMESTIC PRODUCT GROWTH MODELS GROWTH RATE GROWTH THEORY HOLDING HOUSEHOLDS HUMAN CAPITAL HUMAN DEVELOPMENT INCOME LEVELS INDIVIDUAL ACCESS INDUSTRIALIZATION INFLATION INFORMAL ECONOMY INSTRUMENT INSTRUMENTS FOR CREDIT INTERNATIONAL BANK INTERNATIONAL CAPITAL INVESTABLE FUNDS INVESTMENT OPPORTUNITIES LEGAL CONSTRAINT LEGAL PROTECTIONS LEGAL SYSTEM LENDER LOAN LOANABLE FUNDS LOCAL BANKS LOCAL ECONOMY LOCAL GOVERNMENT LOCAL SAVINGS MACROECONOMIC STABILITY MACROECONOMIC VARIABLES MARGINAL PRODUCT MARGINAL PROPENSITY TO SAVE MARKET DEVELOPMENT MARKET SEGMENTATION MEDIUM ENTERPRISES MONEY MARKET MONEY SUPPLY MORAL HAZARD NATIONAL ECONOMIES NDP NET DOMESTIC PRODUCT OPEN ECONOMIES OPEN ECONOMY ORIGINAL INSTRUMENTS PER CAPITA INCOME PHYSICAL CAPITAL POLITICAL ECONOMY PRIMARY EDUCATION PRIVATE CREDIT PROBABILITY PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROPENSITY TO SAVE PUBLIC GOOD RAPID GROWTH RATE OF GROWTH REAL INCOME RESERVE RESERVE BANK RESERVE BANK OF INDIA RESERVE REQUIREMENTS RETURNS SAVINGS SECURITIES SECURITIES LAW SMALL BUSINESS SMALL BUSINESS BORROWERS SMALL BUSINESS LENDING SOCIAL BANKING STOCK MARKET STOCK MARKET DEVELOPMENT STOCK MARKETS SUPPLY CURVES SUPPLY OF CREDIT TRANSPORT VALUABLE VILLAGE VILLAGES Using a unique sample of net domestic product data for districts in India, I investigate the connection between banking sector development, human capital, and economic growth at the sub-national level. Using disaggregate data avoids many of the omitted variable problems that plague cross-country studies of the finance-growth connection and facilitates an instrumentation strategy. The findings show that the growth of many districts in India is financially constrained due to lack of banking sector development, and that the relationship between finance and growth may be non-linear. For the districts in the sample, moving from the 75th percentile of credit/net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s. This indicates that the gains from increased banking sector outreach may be large. The analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development. In a district at the 25th literacy percentile, the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile. Thus, higher levels of human capital may activate alternative growth and production channels that are less finance intensive. 2012-03-19T19:08:47Z 2012-03-19T19:08:47Z 2009-02-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090213151623 http://hdl.handle.net/10986/4034 English Policy Research working paper ; no. WPS 4838 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |