![Sample our Urban Studies journals, sign in here to start your FREE access for 14 days]({"type":"image" , "src" : "/sda/110826/TOC-Subject-Sample-2021-Urban-Studies.jpg"})
Abstract
Carbó Valverde S., López del Paso R. and Rodríguez Fernández F. (2007) Financial innovations in banking: impact on regional growth, Regional Studies 41, 311–326. This paper contributes to the literature on the relationship between finance and growth by analysing the relationships between financial intermediation and economic growth within the regions of one country, rather than with different countries. The focus on regions is relevant since regional information is more homogeneous, the legal and institutional factors are similar, and the relevant financial market is more accurately defined. The study also incorporates the effects of a set of banking innovations. The analysis is undertaken for the Spanish regions. The results show that product and service delivery innovations contribute positively to regional gross domestic product, investment and gross savings growth.
Carbó Valverde S., López del Paso R. et Rodríguez Fernández F. (2007) Les innovations financières dans le secteur bancaire: l'impact sur la croissance régionale, Regional Studies 41, 311–326. Cet article cherche à contribuer à la documentation sur le rapport entre la finance et la croissance en analysant les rapports entre l'intermédiation financière et la croissance économique au coeur des régions d'un seul pays, plutôt que de plusieurs pays différents. La région comme point de mire est pertinente parce que les données régionales sont plus homogènes, les facteurs juridiques et institutionnels sont similaires, et le marché financier en question est délimité avec précision. L'étude inclut aussi les effets d'un ensemble d'innovations bancaires. On fait l'analyse pour les régions d'Espagne. Les résultats laissent voir que les innovations relatives à la production et à la fourniture de services sont en corrélation étroite avec la croissance du PIB régional, de l'investissement et de l'épargne brute.
Croissance économique Intermédiation financière Régions
Carbó Valverde S., López del Paso R. und Rodríguez Fernández F. (2007) Finanzielle Innovationen im Bankwesen: die Auswirkung auf das Regionalwachstum, Regional Studies 41, 311–326. Dieser Artikel liefert einen Beitrag zur Literatur über das Verhältnis zwischen Finanzwesen und Wachstum durch eine Analyse der Beziehung zwischen Finanzvermittlungsdiensten und Wirtschaftswachstum innerhalb der Regionen eines Landes statt mehrerer Länder. Dieser Fokus auf den Regionen ist deshalb von Bedeutung, weil die regionalen Informationen homogener sind, ähnliche rechtliche und institutionelle Faktoren vorliegen und der jeweilige Finanzmarkt genauer definiert ist. Ebenso werden in unserer Studie die Auswirkungen verschiedener Innovationen im Bankwesen untersucht. Die Analyse wird für die Regionen Spaniens durchgeführt. Die Ergebnisse zeigen, dass Innovationen bei Produkten und Dienstleistungen einen positiven Beitrag zum regionalen BIP, zu den Investitionen und zum Bruttowachstum der Ersparnisse leisten.
Wirtschaftswachstum Finanzvermittlungsdienste Regionen
Carbó Valverde S., López del Paso R. y Rodríguez Fernández F. (2007) Innovaciones financieras en la banca: impacto en el crecimiento regional, Regional Studies 41, 311–326. Este artículo aporta nuevos datos a la literatura especializada en la relación entre finanzas y crecimiento al analizar las relaciones entre la intermediación financiera y el crecimiento económico en las regiones de un mismo país en vez de hacer una comparación con otros países. Este enfoque en las regiones es importante dado que la información regional es más homogénea, los factores legales e institucionales son similares y el mercado financiero relevante está definido con mejor precisión. Nuestro estudio también incorpora los efectos de una serie de innovaciones bancarias. Los resultados de este análisis llevado a cabo en las regiones españolas demuestran que las innovaciones en el suministro de productos y servicios contribuyen positivamente al PIB regional, la inversión y el crecimiento del ahorro bruto.
Crecimiento económico Intermediación financiera Regiones
Acknowledgements
Financial support from MCYT and FEDER, SEC2002-00348 and MEC-FEDER, SEJ2005-04927 is acknowledged and appreciated by the authors. Santiago Carbó and Francisco Rodríguez acknowledge financial support from the ‘Ayuda a la investigación en Ciencias Sociales’ of the Fundación BBVA. The authors also thank for comments: Paul Stoneman and the other participants at the International Workshop on European Financial Markets, Investment and Technological Performance, held at the University of Warwick, Coventry, UK (February 2004) within Contract No. HPSE-CT-1999-0039, DG Research, European Union. The authors would also like to thank Jordi Galí, David B. Humphrey, Gregory Udell, Francisco Pérez and the other participants at the International Workshop on Money, Financial System and Economic Growth held in Salamanca, Spain (July 2004) for valuable comments to this paper. They also are thankful for comments from Hans Degryse, Reinhilde Veugelers, Frank Verboven and the other participants at the ETEW-CES Seminar given at the Katholieke Universiteit Leuven, Belgium (October 2004).
Notes
1. For a survey of the implications of different legal and financial environments for economic growth, see Demirgüç-Kunt and Maksimovic Citation(1998).
2. This view was implicit in the contribution of Goldsmith–McKinnon–Shaw. Banks reduce transaction costs when transforming savings into investment and the quantity and quality of financial services help explain differences in growth rates across countries.
3. The aim of quantifying the contribution of banking to economic development requires the definition of the direction of the causality relationship between financial intermediation and growth. Two main methodologies have been employed to analyse this relationship. The first relies upon a long-run model that suggests a double direction of causality over a time horizon. In this model, economic growth favours the expansion of financial intermediaries in their early stages of development while, later on, a mature and consolidated financial system enhances more efficient investment decisions and faster economic growth. Besides, the contribution of intermediaries in these models does not rely directly on capital accumulation but on capital productivity (Greenwood and Jovanovic, Citation1990). Second, causality effects have been also evaluated within the so-called bisectoral models of growth (Odedokun, Citation1996; Wang, Citation1999). These models are defined in two ways. A first stage of the model assumes that the financial sector positively affects economic growth (financial-leading), while the second poses that the economic conditions stimulate financial development (real-fostering). The joint evaluation of these equations also favours the hypothesis of double causality.
4. King and Levine Citation(1993) note that the productivity of capital may increase in two ways: (1) banks collect information on borrowers that permit them to discriminate among alternative investment projects; and (2) banks induce individuals to invest in riskier but more productive technologies enhancing risk sharing. Many of the improvements in the monitoring and screening functions of financial intermediaries are related to the costs of financial innovation. Innovation increases efficiency and reduces risk, so that monitoring costs decrease and investment productivity rises for any given equilibrium growth rate. Financial innovation improves the efficiency of the screening and monitoring functions in evaluating specialized firm investment projects. Endogenous financial intermediation also avoids the duplication of monitoring and risk control of investment when entrepreneurs do not have incentives to develop these functions in the presence of transaction costs. The optimal level of monitoring depend on input prices and increases with capital accumulation. Similarly, improvements in monitoring ameliorate the risk properties of corporate loan contracts and foster firms' innovations (De la Fuente and Marín, Citation1996).
5. On the other hand, overlapping generations models, such as Jappelli and Pagano Citation(1992), show that binding liquidity constraints may also increase savings since present consumption of certain type of consumers (as young households) is limited by current resources (not permanent income).
6. This study deals mainly with the effects of efficiency and innovations improvements in the banking sector. There are also important welfare implications from the regional perspective such as the effects of banking sector developments on financial exclusion. See Chakravarty Citation(2006) as a comprehensive reference on the effects of regional banking sectors on financial exclusion.
7. This is the view, for instance, that prevails in the joint project of the European Central Bank (ECB) and the Center for Financial Studies ‘ECB-CFS Research Network on Capital Markets and Integration in Europe. A Road Map’ where there is claim for regional studies of this nature.
8. All this information has been taken from the Central Balance Sheet (Central de Balances) database of the Bank of Spain.
9. For a detailed discussion on the main determinants of economic growth across countries, see Barro and Sala-i-Martín Citation(1998) and Sala-i-Martín Citation(2002).
10. Additionally, time dummies are included in the regression since business cycles are different enough across Spanish regions and over time.
11. In dynamic panel data models where the observations are highly autoregressive and the number of time series is small, the standard GMM estimator has been found to have large finite simple bias and poor precision in simulation studies (Arellano and Bond 1999). The poor performance of the Standard GMM panel data estimator is also frequent in relatively short panels with highly persistent data. The GMM system estimator improves the performance of the GMM estimator in the dynamic panel data context. Additionally, the GMM system estimator produces substantial asymptotic efficiency gains relative to this non-linear GMM estimator, and these are reflected in their finite sample properties (Blundell et al., Citation2000).
12. In addition, the ‘difference-Sargan test’ (Blundell and Bond, Citation1997) was used to examine the null hypothesis that the lagged differences of the explanatory variables are uncorrelated with the residuals (which are the additional restrictions imposed in the system estimator with respect to the difference estimator). This null hypothesis cannot be rejected, which gives further support to the system estimator.
13. All sets of equations are estimated following the aforementioned GMM procedure.
14. These regions are called ‘Comunidades Autónomas’.
15. The larger homogeneity on the institutional, legal and cultural factors across regions does not necessarily imply that there are no differences in the levels of the variables behind economic growth across regions (i.e. level of schooling, capital stock and financial variables). In the present analysis, variability across regions is observed by simply looking at regional information (these data are publicly available).
16. Studies such as Leonida and Montolio Citation(2004) have shown the existence of important structural differences in the determinants of economic growth and income distribution across Spanish regions.
17. The results remain very similar when including private or public capital separately.
18. There is no regional information on bank operating costs or bank margins. For this reason, one needs to proxy operating costs by using one of the main sources of operating costs (branches).
19. Similar results are obtained when computing the HHI employing total loans and, alternatively, total assets.
20. Mutual funds in Spain have experienced a dramatic expansion during the 1990s – being the largest bank brokerage product innovation in recent years – and banks manage approximately the 90% of their distribution.
21. Alternatively, the number of electronic fund transfers at the point of sale (EFTPOS) was also employed and the results were very similar.
22. The instruments employed seem to be appropriate in all cases according to the values of the Sargan test.
23. This is explained by the fact that the main contribution of banks to economic growth usually appears in the short-run, but its effects are likely to remain over time (Demirgüç-Kunt and Maksimovic, Citation2002).
24. The positive sign of the GDP coefficient tentatively suggests the absence of GDP β-convergence across Spanish regions This result is in line with recent studies that have developed different empirical procedures to estimate β-convergence across Spanish regions (Lamo, Citation2000; Leonida and Montolio, Citation2004).
25. The variable ‘loan commitments/total lending’ was also included in the empirical equation with one and two lags since the benefits from these relationships usually do not show up in the same period. The short-run coefficient of this variable was also significant in these cases.
26. With the aim of studying a likely impact of the change in monetary policy regimes on the inflation levels of the Spanish regions with the advent of the euro in 1999, Equationequation (2) was also re-estimated using a dummy variable that takes the value zero until 1999 and 1 onwards (not shown). This dummy was not found to be statistically significant and it did not improve the econometric goodness-of-fit of the regression model.