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Banks (but not stock markets) promote economic growth by facilitating relationship-specific investment between buyers and suppliers of intermediate goods. Combined insights from literature on signaling role of banks and on relationship-specific investment motivate this economic channel: A...
Persistent link: https://www.econbiz.de/10013037905
An influential strand of literature starting with the Nobel Prize winning work of Oliver Williamson (1971, 1975) argues that a rational agent underinvests in relationship-specific assets due to the possibility of an opportunistic behaviour on the part of her contractual partner. We first combine...
Persistent link: https://www.econbiz.de/10013133692
Existing literature sees opportunistic behaviour of contractual partners as the main reason why rational agents underinvest in relationship-specific assets. We look beyond this well-know holdup problem and argue that financial vulnerability and short-term planning horizon can also lead to such...
Persistent link: https://www.econbiz.de/10009010059
Existing literature sees opportunistic behaviour of contractual partners as the main reason why rational agents underinvest in relationship-specific assets. We look beyond this well-know holdup problem and argue that financial vulnerability and short-term planning horizon can also lead to such...
Persistent link: https://www.econbiz.de/10013093852
Credit reporting systems are an important ingredient for financial markets. These systems are based upon the unique identification of borrowers, which is enabled if a compulsory identification system exists in a country. We present evidence derived from difference-in-difference analyses on the...
Persistent link: https://www.econbiz.de/10013122945
Credit reporting systems are an important ingredient for financial markets. These systems are based upon the unique identification of borrowers, which is enabled if a compulsory identification system exists in a country. We present evidence derived from difference-in-difference analyses on the...
Persistent link: https://www.econbiz.de/10009230360
We test whether output growth in European economic agglomeration regions depends on financial development. To this end we suggest a relative measure of the quality of financial institutions rather than the usual quantity proxy of financial development. In order to measure the quality of...
Persistent link: https://www.econbiz.de/10012989291
Joseph A. Schumpeter is one of the most famous economists of the 20th century and the ’patron saint’ of the finance and growth literature. We have discovered that the prevailing literature has, however, misinterpreted Schumpeter, which leads to puzzling empirical results and difficulties in...
Persistent link: https://www.econbiz.de/10013201693
Persistent link: https://www.econbiz.de/10001565895
To clarify the causal links between financial activity and economic growth, three theoretical models are analyzed and a structural equation path models is estimated. In the modeling part, poverty traps result from large fixed costs or high proportions of real investment to run a financial...
Persistent link: https://www.econbiz.de/10010506650