This paper identifies a novel connection between the banking sector and economic growth. I consider strategic competition among banks in an economic growth model with externalities. The allocation delivered by the banking sector is proven to be different from that in the Walrasian equilibrium...

The sources of "total factor productivity (TFP) growth" or the "Solow residual" typically remain unknown as a residual. This paper aims to identify the underlying sources of this residual growth, being explicit about micro underpinnings and transitional growth from occupation choices of...