Journal Article

New Empirical Evidence on Local Financial Development and Growth

Letters in Spatial and Resource Sciences

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.

Authors

Roberto Patuelli
Andrea Vaona

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Publication Date
JEL Classification
O18, O16, C31