Does Financial Intermediation Matter for macroeconomic Efficiency ?

Pierre-Guillaume Méon and Laurent Weill

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: This paper investigates whether financial intermediary development influences macroeconomic technical efficiency on a sample of 47 countries, both developed and developing, over 1980-1995. We do so by applying Battese and Coelli (1995)’s method at the aggregate level. It is found that financial intermediary development, except financial depth, is on average associated with more efficiency. However we find strong evidence that this relationship is conditional on the level of economic development. The lower economic development the weaker is the impact of financial development on efficiency. That impact can even become negative in the poorest countries.

Keywords: Financial development; income; aggregate productivity; efficiency. (search for similar items in EconPapers)
JEL-codes: C33 O11 O16 O47 (search for similar items in EconPapers)
Date: 2008
New Economics Papers: this item is included in nep-eff and nep-mac
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Related works:
Working Paper: Does financial intermediation matter for macroeconomic efficiency? (2007)
Working Paper: Does financial intermediation matter for macroeconomic efficiency? (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2008-05

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