nep-fdg New Economics Papers
on Financial Development and Growth
Issue of 2017‒07‒30
two papers chosen by
Georg Man

  1. Savings banks and the industrial revolution in Prussia: Supporting regional development with public financial institutions By Lehmann-Hasemeyer, Sibylle H.; Wahl, Fabian
  2. Financial Development and Monetary Policy: Loan Applications, Rates, and Real Effects By Abuka, Charles; Alinda, Ronnie; Minoiu, Camelia; Peydró, José Luis; Presbitero, Andrea

  1. By: Lehmann-Hasemeyer, Sibylle H.; Wahl, Fabian
    Abstract: We show that smaller, regional public financial intermediaries significantly contributed to industrial development, using a new data set of the foundation year and location of Prussian savings banks. This extends the banking-growth nexus beyond its traditional focus on the large universal banks, to savings banks. The saving banks had an impact through the financing of public infrastructure, such as railways, and new private factories. Saving banks were public financial intermediaries, so our results strongly suggest that state intervention can be very successful, particularly in regions in the early stages of industrial development when capital requirements are manageable, and access to international capital markets is limited.
    Keywords: Savings Banks,Prussia,Industrialisation,Public Infrastructure,Regional and Urban Development
    JEL: G21 N23 N74 N93 R11
    Date: 2017
  2. By: Abuka, Charles; Alinda, Ronnie; Minoiu, Camelia; Peydró, José Luis; Presbitero, Andrea
    Abstract: The finance-growth literature argues that institutional constraints in developing countries impede financial intermediation and monetary policy transmission. Recent studies using aggregate data document a weak bank lending channel. For identification, we instead exploit Uganda's super- visory credit register, with loan applications and rates, and unanticipated variation in monetary policy. A monetary tightening strongly reduces credit supply - increasing loan application rejections and tightening volume and rates - especially for banks with more leverage and sovereign debt exposure (even within the same borrower-period). There are spillovers on inflation and eco- nomic activity, especially in more financially-developed areas, including on commercial building, trade, and social unrest.
    Keywords: Bank credit; bank lending channel; developing countries; Financial Development; monetary policy; Real effects
    JEL: E42 E44 E52 E58 G21 G28
    Date: 2017–07

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