Local financial development and growth
By: Jake Kendall.
Contributors: World Bank.
Series: Policy research working paper -- 4838; Policy research working papers (Online) -- 4838.
Publisher: World Bank
Published: 2009
Place of publication: [Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Banks and banking -- India; Human capital -- India; India -- Economic conditions -- 1991- -- Regional disparities
Description: "Using a unique sample of net domestic product data for districts in India, I investigate the connection between banking sector development, human capital, and economic growth at the sub-national level.  Using disaggregate data avoids many of the omitted variable problems that plague cross-country studies of the finance-growth connection and facilitates an instrumentation strategy.  The findings show that the growth of many districts in India is financially constrained due to lack of banking sector development, and that the relationship between finance and growth may be non-linear.  For the districts in the sample, moving from the 75th percentile of credit/net domestic product to the 25th percentile implies an average loss of 4 percent in growth over the 1990s.  This indicates that the gains from increased banking sector outreach may be large.  The analysis shows that human capital deepening can reduce the effect of the financial constraint and help decouple growth from financial development.  In a district at the 25th literacy percentile, the implied growth loss due to a constrained banking sector is twice as large as in a district at the 75th literacy percentile.  Thus, higher levels of human capital may activate alternative growth and production channels that are less finance intensive. "--World Bank web site.
Notes: Title from PDF file as viewed on 5/8/2009.

Includes bibliographical references.

Also available in print.

System requirements: Adobe Acrobat Reader.

Mode of access: World Wide Web.