Does Local Financial Development Matter

@inproceedings{Guiso2002DoesLF,
  title={Does Local Financial Development Matter},
  author={Luigi Guiso and Paola Sapienza and Luigi Zingales},
  year={2002}
}
We study the effects of differences in local financial development within an integrated financial market. We construct a new indicator of financial development by estimating a regional effect on the probability that, ceteris paribus, a household is shut off from the credit market. By using this indicator, we find that financial development enhances the probability an individual starts his own business, favors entry of new firms, increases competition, and promotes growth. As predicted by theory… CONTINUE READING

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