Banks' Inefficiency and Economic Growth: A Micro-Macro Approach

This paper offers a methodological contribution to the empirical analysis of the relationship between banking and economic growth by suggesting a new indicator for the state of development of the banking system based on a measure of bank microeconomic efficiency. This choice helps to overcome the pr...

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Bibliographic Details
Published in:Scottish journal of political economy 2001-09, Vol.48 (4), p.400-424
Main Authors: Lucchetti, Riccardo, Papi, Luca, Zazzaro, Alberto
Format: Article
Language:English
Subjects:
Banking
Banking system
Causality
Economic growth
Italy
Macroeconomics
Methodology
Microeconomics
Political economy
Regions
Studies
Technical efficiency
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Summary:This paper offers a methodological contribution to the empirical analysis of the relationship between banking and economic growth by suggesting a new indicator for the state of development of the banking system based on a measure of bank microeconomic efficiency. This choice helps to overcome the problem of causality and to capture the effects of banks’ activity on growth. This new approach is then applied to analyse the relationship between the banking system and economic growth in the Italian regions, through a dynamic panel technique. The empirical results show the existence of an independent effect exerted by the efficiency of banks on regional growth.
ISSN:0036-9292
1467-9485
DOI:10.1111/1467-9485.00206