Letters in Spatial and Resource Sciences

, Volume 1, Issue 2–3, pp 147–157 | Cite as

New empirical evidence on local financial development and growth

Original Paper
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Abstract

In this paper, we show that the regional finance-growth nexus in Italy is robust to a series of innovations with respect to the existing literature on the topic. We use finer measures of economic and financial development, as well as instruments with a deeper economic content. We rely on state-of-the-art cross-sectional and panel estimation methods, and we offer a thorough investigation of the nonlinearities in the relation between finance and growth. Our results show that, while local financial development is a key factor for economic growth, in regions with inefficient courts more credit might translate into reduced growth due to opportunistic behaviour and the consequent misallocation of funds.

Keywords

Finance Growth Regions Italy Cross-section analysis Panel data analysis 

JEL Classification

O18 O16 C31 
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Copyright information

© Springer-Verlag 2008

Authors and Affiliations

  1. 1.Institute for Economic Research (IRE)University of LuganoLuganoSwitzerland
  2. 2.Kiel Institute for the World EconomyKielGermany
  3. 3.Department of Economic SciencesUniversity of VeronaVeronaItaly
  4. 4.The Rimini Centre for Economic AnalysisRiminiItaly

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