|June 2012||Does Finance Cause Growth? Evidence from the Origins of Banking in Russia|
with Mark Hoekstra, Koen Schoors: w18139
This paper examines the effect of banking on economic growth in modern Russia. To overcome simultaneity and selection, we exploit regional banking variation induced by the creation of "specialized banks" (spetsbanks) in the last years of the Soviet Union (1988-1991). Consistent with the qualitative work of Joel Hellman  and Juliet Johnson , we show that these reforms generated an ideal natural experiment in that the concentration of spetsbanks is jointly uncorrelated with 15 predictors of future growth, including pre-banking income, education, anti-market sentiment, institutional quality, and government interference in the economy. Results indicate that while the presence of one additional spetsbank per million inhabitants increased total within-state lending to private firm...
Published: Berkowitz, Daniel & Hoekstra, Mark & Schoors, Koen, 2014. "Bank privatization, finance, and growth," Journal of Development Economics, Elsevier, vol. 110(C), pages 93-106. citation courtesy of