Financial development and growth in the short and long run

"We analyze the relationship between financial development and inter-industry resource allocation in the short- and long-run. We suggest that in the long-run, economies with high rates of financial development will devote relatively more resources to industries with a 'natural' relian...

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Bibliographic Details
Main Author: Fisman, Raymond
Corporate Author: National Bureau of Economic Research
Other Authors: Love, Inessa
Format: eBook
Language:English
Published: Cambridge, MA National Bureau of Economic Research 2004
Series:NBER working paper series
Subjects:
Online Access:
Collection: World Bank E-Library Archive - Collection details see MPG.ReNa
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245 0 0 |a Financial development and growth in the short and long run  |h Elektronische Ressource  |c Raymond Fisman, Inessa Love 
260 |a Cambridge, MA  |b National Bureau of Economic Research  |c 2004 
653 |a Resource allocation / Econometric models 
653 |a Industrialization / Econometric models 
653 |a Finance / Econometric models 
700 1 |a Love, Inessa 
710 2 |a National Bureau of Economic Research 
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500 |a Includes bibliographical references. - Title from PDF file as viewed on 1/21/2005 
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082 0 |a 330 
520 |a "We analyze the relationship between financial development and inter-industry resource allocation in the short- and long-run. We 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 we 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, we 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. We find differential effects of these measures on industry growth and composition in countries with different levels of financial development. We 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"--National Bureau of Economic Research web site