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Financial Intermediation and Growth: Causality and Causes
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TL;DR: In this article, the authors evaluate whether the level of development of financial intermediaries exerts a casual influence on economic growth, and they find that financial intermediary development has a large causal impact on growth.
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Abstract: Legal and accounting reform that strengthens creditor rights, contract enforcement, and accounting practices boosts financial development and accelerates economic growth. Levine, Loayza, and Beck evaluate: Whether the level of development of financial intermediaries exerts a casual influence on economic growth. Whether cross-country differences in legal and accounting systems (such as creditor rights, contract enforcement, and accounting standards) explain differences in the level of financial development. Using both traditional cross-section, instrumental-variable procedures and recent dynamic panel techniques, they find that development of financial intermediaries exerts a large causal impact on growth. The data also show that cross-country differences in legal and accounting systems help determine differences in financial development. Together, these findings suggest that legal and accounting reform that strengthens creditor rights, contract enforcement, and accounting practices boosts financial development and accelerates economic growth. This paper - a product of Macroeconomics and Growth, Development Research Group - is part of a larger effort in the group to understand the links between the financial system and economic growth. Thorsten Beck may be contacted at tbeck@worldbank.org.
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Investor Protection and Corporate Governance
TL;DR: In this article, the authors argue that the legal approach is a more fruitful way to understand corporate governance and its reform than the conventional distinction between bank-centered and market-centered financial systems, and discuss the possible origins of these differences, summarize their consequences, and assess potential strategies of corporate governance reform.
7.2K
A Note on the Theme of Too Many Instruments
TL;DR: In this paper, the authors review the evidence on the effects of instrument proliferation, and describes and simulates simple ways to control it, and illustrate the dangers by replicating two early applications to economic growth: Forbes (2000) on income inequality and Levine, Loayza, and Beck (2000).
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Growth is Good for the Poor
David Dollar,Aart Kraay +1 more
TL;DR: Dollar and Kraay as mentioned in this paper found that the share of income accruing to the bottom quintile does not vary systematically with the average income, and that when average incomes rise, the average incomes of the poorest fifth of society rise proportionately.
3.6K
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Finance and the Sources of Growth
TL;DR: Beck, Levine, and Loayza as mentioned in this paper evaluate whether the level of development in the banking sector exerts a causal impact on economic growth and its sources- total factor productivity growth, physical capital accumulation, and private saving.
3.5K
Chapter 12 Finance and Growth: Theory and Evidence
Ross Levine
- 01 Jan 2005
TL;DR: The authors reviewed, appraises, and critiques theoretical and empirical research on the connections between the operation of the financial system and economic growth, concluding that both financial intermediaries and markets matter for growth and that reverse causality alone is not driving this relationship.
2.4K
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TL;DR: The Extinction of the World's Languages and the Erosion of Human Knowledge as discussed by the authors is the first to focus on the essential question, what is lost when a language dies? What forms of knowledge are embedded in a language's structure and vocabulary? And how harmful is it to humanity that such knowledge is lost forever?
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Saving in the world: stylized facts
Norman Loayza,Humberto Lopez,Klaus Schmidt-Hebbel,Luis Servén +3 more
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TL;DR: Lopez et al. as mentioned in this paper found that country saving rates tend to rise with per capita real income levels and growth rates, domestic investment, public saving, money stocks, and private financial wealth.
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How Incentive-Incompatible Deposit-Insurance Funds Fail
TL;DR: In this paper, the authors focus on how principal-agent conflicts and asymmetries in the distribution of information lead to myopic behavior by IIDIF managers and by politicians who appoint and constrain them.
41
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Measuring Financial Development in Sub-Saharan Africa
TL;DR: In this paper, the authors introduce an index for measuring financial development and a set of six indices representing key characteristics of the financial systems in 38 sub-Saharan African countries. And they show that these countries have made good progress in improving and modernizing their financial systems during the last decade, particularly with regard to financial liberalization and the adoption of indirect instruments of monetary policy.
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