Can Financial Infrastructures Foster Economic Development?

25 Pages Posted: 27 Dec 2010

See all articles by Bruno Amable

Bruno Amable

National Center for Scientific Research (CNRS) - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP); Université Paris I Panthéon-Sorbonne

Jean-Bernard Chatelain

Paris School of Economics, Université Paris 1 Panthéon Sorbonne

Date Written: January 2001

Abstract

In this paper, financial infrastructures increase the efficiency of the banking sector: they decrease the market power (due to horizontal differentiation) of the financial intermediaries, lower the cost of capital, increase the number of depositors and the amount of intermediated savings, factors which in turn increase the growth rate and may help countries to take off from a poverty trap. Taxation finances financial infrastructures and decreases the private productivity of capital. Growth and welfare maximising levels of financial infrastructures are computed.

Keywords: Endogenous growth, imperfect competition, financial infrastructures

JEL Classification: O16, E62, G21

Suggested Citation

Amable, Bruno and Amable, Bruno and Chatelain, Jean-Bernard, Can Financial Infrastructures Foster Economic Development? (January 2001). Banque de France Working Paper No. 80, Available at SSRN: https://ssrn.com/abstract=1730201 or http://dx.doi.org/10.2139/ssrn.1730201

Bruno Amable (Contact Author)

National Center for Scientific Research (CNRS) - Centre d'Etudes Prospectives d'Economie Mathematique Appliquees a la Planification (CEPREMAP) ( email )

Ecole Normale Superieure
48 boulevard Jourdan
Paris, 75014
France

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

Jean-Bernard Chatelain

Paris School of Economics, Université Paris 1 Panthéon Sorbonne ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

HOME PAGE: http://www.parisschoolofeconomics.eu/fr/chatelain-jean-bernard/

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