Local Financial Development and Growth

Kendall, Jake

dc.creator	Kendall, Jake
dc.date	2012-03-19T19:08:47Z
dc.date	2012-03-19T19:08:47Z
dc.date	2009-02-01
dc.date.accessioned	2023-02-17T21:08:00Z
dc.date.available	2023-02-17T21:08:00Z
dc.identifier	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
dc.identifier	http://hdl.handle.net/10986/4034
dc.identifier.uri	http://localhost:8080/xmlui/handle/CUHPOERS/245004
dc.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.
dc.language	English
dc.relation	Policy Research working paper ; no. WPS 4838
dc.rights	CC BY 3.0 IGO
dc.rights	http://creativecommons.org/licenses/by/3.0/igo/
dc.rights	World Bank
dc.subject	ACCESS TO FINANCE
dc.subject	ACCESS TO FINANCIAL SERVICES
dc.subject	ACCESS TO LOANS
dc.subject	ADULT ILLITERACY
dc.subject	AGRICULTURE
dc.subject	AUTONOMY
dc.subject	BALANCE OF PAYMENTS
dc.subject	BALANCE OF PAYMENTS CRISIS
dc.subject	BALANCE SHEET
dc.subject	BANK BALANCE SHEET
dc.subject	BANK BRANCH
dc.subject	BANK CREDIT
dc.subject	BANK DEPOSIT
dc.subject	BANKING INDUSTRY
dc.subject	BANKING SECTOR
dc.subject	BANKING SECTOR DEVELOPMENT
dc.subject	BANKING SECTOR OUTREACH
dc.subject	BANKING SECTORS
dc.subject	BANKING SYSTEM
dc.subject	BOND
dc.subject	BOND MARKETS
dc.subject	BORROWER
dc.subject	BORROWING
dc.subject	BRANCH BANKING
dc.subject	CALCULATIONS
dc.subject	CAPITAL ACCUMULATION
dc.subject	CAPITAL FLOWS
dc.subject	CAPITAL MARKETS
dc.subject	CENTRAL BANK
dc.subject	CHECKS
dc.subject	COLLATERAL
dc.subject	COMMERCIAL BANK
dc.subject	COMMERCIAL BANK CREDIT
dc.subject	COMMERCIAL BANKS
dc.subject	CONTRACTUAL SAVINGS
dc.subject	CONTRIBUTION
dc.subject	CONTRIBUTIONS
dc.subject	CORRUPTION
dc.subject	CREDIT MARKET
dc.subject	CREDIT MARKETS
dc.subject	CREDITOR
dc.subject	DEMAND CURVES
dc.subject	DEMAND FOR CREDIT
dc.subject	DEPOSIT
dc.subject	DEPOSIT ACCOUNTS
dc.subject	DEPOSIT SERVICES
dc.subject	DEPOSITS
dc.subject	DEPRECIATION
dc.subject	DEREGULATION
dc.subject	DEVELOPING COUNTRIES
dc.subject	DEVELOPING COUNTRY
dc.subject	DEVELOPMENT ECONOMICS
dc.subject	DISTRIBUTION OF INCOME
dc.subject	DISTRICT GOVERNMENTS
dc.subject	DOMESTIC CAPITAL
dc.subject	ECONOMETRICS
dc.subject	ECONOMIC ACTIVITIES
dc.subject	ECONOMIC ACTIVITY
dc.subject	ECONOMIC DEVELOPMENT
dc.subject	ECONOMIC GROWTH
dc.subject	ECONOMIC HISTORY
dc.subject	ECONOMIC PERFORMANCE
dc.subject	ECONOMIC REFORM
dc.subject	ECONOMIC STRUCTURES
dc.subject	ECONOMIC THEORY
dc.subject	ENDOGENOUS VARIABLES
dc.subject	ENROLLMENT
dc.subject	ENTREPRENEUR
dc.subject	ENTREPRENEURS
dc.subject	EXTENSION OF CREDIT
dc.subject	EXTERNAL FUNDS
dc.subject	FAVORABLE TERMS
dc.subject	FINANCIAL ACCESS
dc.subject	FINANCIAL CAPACITY
dc.subject	FINANCIAL CONSTRAINT
dc.subject	FINANCIAL CONSTRAINTS
dc.subject	FINANCIAL DEPTH
dc.subject	FINANCIAL DEVELOPMENT
dc.subject	FINANCIAL INTERMEDIATION
dc.subject	FINANCIAL LITERACY
dc.subject	FINANCIAL MARKETS
dc.subject	FINANCIAL REGULATIONS
dc.subject	FINANCIAL SECTOR
dc.subject	FINANCIAL SERVICES
dc.subject	FINANCIAL SYSTEM
dc.subject	FIXED COSTS
dc.subject	FOREIGN BANKS
dc.subject	FORMAL ECONOMY
dc.subject	FORMAL FINANCE
dc.subject	FORMAL LENDING
dc.subject	FUTURE CREDIT
dc.subject	FUTURE GROWTH
dc.subject	GDP
dc.subject	GLOBALIZATION
dc.subject	GROSS DOMESTIC PRODUCT
dc.subject	GROWTH MODELS
dc.subject	GROWTH RATE
dc.subject	GROWTH THEORY
dc.subject	HOLDING
dc.subject	HOUSEHOLDS
dc.subject	HUMAN CAPITAL
dc.subject	HUMAN DEVELOPMENT
dc.subject	INCOME LEVELS
dc.subject	INDIVIDUAL ACCESS
dc.subject	INDUSTRIALIZATION
dc.subject	INFLATION
dc.subject	INFORMAL ECONOMY
dc.subject	INSTRUMENT
dc.subject	INSTRUMENTS FOR CREDIT
dc.subject	INTERNATIONAL BANK
dc.subject	INTERNATIONAL CAPITAL
dc.subject	INVESTABLE FUNDS
dc.subject	INVESTMENT OPPORTUNITIES
dc.subject	LEGAL CONSTRAINT
dc.subject	LEGAL PROTECTIONS
dc.subject	LEGAL SYSTEM
dc.subject	LENDER
dc.subject	LOAN
dc.subject	LOANABLE FUNDS
dc.subject	LOCAL BANKS
dc.subject	LOCAL ECONOMY
dc.subject	LOCAL GOVERNMENT
dc.subject	LOCAL SAVINGS
dc.subject	MACROECONOMIC STABILITY
dc.subject	MACROECONOMIC VARIABLES
dc.subject	MARGINAL PRODUCT
dc.subject	MARGINAL PROPENSITY TO SAVE
dc.subject	MARKET DEVELOPMENT
dc.subject	MARKET SEGMENTATION
dc.subject	MEDIUM ENTERPRISES
dc.subject	MONEY MARKET
dc.subject	MONEY SUPPLY
dc.subject	MORAL HAZARD
dc.subject	NATIONAL ECONOMIES
dc.subject	NDP
dc.subject	NET DOMESTIC PRODUCT
dc.subject	OPEN ECONOMIES
dc.subject	OPEN ECONOMY
dc.subject	ORIGINAL INSTRUMENTS
dc.subject	PER CAPITA INCOME
dc.subject	PHYSICAL CAPITAL
dc.subject	POLITICAL ECONOMY
dc.subject	PRIMARY EDUCATION
dc.subject	PRIVATE CREDIT
dc.subject	PROBABILITY
dc.subject	PRODUCTION FUNCTION
dc.subject	PRODUCTIVITY
dc.subject	PRODUCTIVITY GROWTH
dc.subject	PROPENSITY TO SAVE
dc.subject	PUBLIC GOOD
dc.subject	RAPID GROWTH
dc.subject	RATE OF GROWTH
dc.subject	REAL INCOME
dc.subject	RESERVE
dc.subject	RESERVE BANK
dc.subject	RESERVE BANK OF INDIA
dc.subject	RESERVE REQUIREMENTS
dc.subject	RETURNS
dc.subject	SAVINGS
dc.subject	SECURITIES
dc.subject	SECURITIES LAW
dc.subject	SMALL BUSINESS
dc.subject	SMALL BUSINESS BORROWERS
dc.subject	SMALL BUSINESS LENDING
dc.subject	SOCIAL BANKING
dc.subject	STOCK MARKET
dc.subject	STOCK MARKET DEVELOPMENT
dc.subject	STOCK MARKETS
dc.subject	SUPPLY CURVES
dc.subject	SUPPLY OF CREDIT
dc.subject	TRANSPORT
dc.subject	VALUABLE
dc.subject	VILLAGE
dc.subject	VILLAGES
dc.title	Local Financial Development and Growth
dc.type	Publications & Research :: Policy Research Working Paper
dc.coverage	The World Region
dc.coverage	The World Region