NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Quantifying the Impact of Financial Development on Economic Development

Jeremy Greenwood, Juan M. Sanchez, Cheng Wang

NBER Working Paper No. 15893
Issued in April 2010
NBER Program(s):   EFG

How important is financial development for economic development? A costly state verification model of financial intermediation is presented to address this question. The model is calibrated to match facts about the U.S. economy, such as intermediation spreads and the firm-size distribution for the years 1974 and 2004. It is then used to study the international data, using cross-country interest-rate spreads and per-capita GDP. The analysis suggests a country like Uganda could increase its output by 140 to 180% if it could adopt the world's best practice in the financial sector. Still, this amounts to only 34 to 40% of the gap between Uganda's potential and actual output.

download in pdf format
   (445 K)

email paper

This paper is available as PDF (445 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15893

Published: Jeremy Greenwood & Juan Sanchez & Cheng Wang, 2013. "Quantifying the Impact of Financial Development on Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(1), pages 194-215, January. citation courtesy of

Users who downloaded this paper also downloaded these:
Del Negro, Perri, and Schivardi w15847 Tax buyouts
Thoma, Torrisi, Gambardella, Guellec, Hall, and Harhoff w15851 Harmonizing and Combining Large Datasets – An Application to Firm-Level Patent and Accounting Data
Aït-Sahalia, Cacho-Diaz, and Laeven w15850 Modeling Financial Contagion Using Mutually Exciting Jump Processes
Mankiw w15846 Spreading the Wealth Around: Reflections Inspired by Joe the Plumber
Levine w10766 Finance and Growth: Theory and Evidence
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us