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.
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Vaona, A., Patuelli, R. New empirical evidence on local financial development and growth. Lett Spat Resour Sci 1, 147–157 (2008). https://doi.org/10.1007/s12076-008-0014-4
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DOI: https://doi.org/10.1007/s12076-008-0014-4