Arbeitspapier
The Politics of Financial Development - The Role of Interest Groups and Government Capabilities
Although financial development is good for long-term growth, not all countries pursue policies that render full financial development. This paper builds on an extensive political economy literature to construct a theoretical model showing that the intensity of opposition to financial development by incumbents depends on both their degree of credit dependency and the role of governments in credit markets. Empirical evidence for this claim is provided, and the results suggest that lower opposition to financial development leads to an effective increase in credit markets development only in those countries that have high government capabilities. Moreover, improvements in government capabilities have a significant impact on credit market development only in those countries where credit dependency is high (thus, opposition is low). This paper therefore contributes to this rich literature by providing a unified account of credit market development that includes two of its main determinants, traditionally considered in isolation.
- Language
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Englisch
- Bibliographic citation
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Series: IDB Working Paper Series ; No. IDB-WP-207
- Classification
-
Wirtschaft
General Financial Markets: General (includes Measurement and Data)
General Financial Markets: Government Policy and Regulation
Financial Institutions and Services: General
Corporate Finance and Governance: Government Policy and Regulation
Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- Subject
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Financial development
Interest groups
Political economy
Government capabilities
- Event
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Geistige Schöpfung
- (who)
-
Becerra, Oscar
Cavallo, Eduardo
Scartascini, Carlos
- Event
-
Veröffentlichung
- (who)
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Inter-American Development Bank (IDB)
- (where)
-
Washington, DC
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Becerra, Oscar
- Cavallo, Eduardo
- Scartascini, Carlos
- Inter-American Development Bank (IDB)
Time of origin
- 2010
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