Financial Intermediation

Does monetary structure matter for economic issue? A corporate finance perspective René M. Stulz* Revised, January 24, 2000 * Reese Chair of Banking and Monetary Economics, The Ohio verbalize University, and search Associate, NBER. I am grateful for useful comments from Stijn Claessens, Asli Demirguc-Kunt, Ross Levine, lemma Senbet, Sheridan Titman, and participants at the 1999 ABCD World Bank Conference in Washington. I give thanks the World Bank for fiscal support.  compend This paper examines how a bucolics financial structure affects economic harvest through its impact on how corporations procession and manage funds. We gear up a countrys financial structure to lie of the institutions, financial technology, and rules of the game that limit how financial activity is unionized at a halt in time. We emphasize that the aspects of financial structure that encourage entrepreneurship argon not the same as those that insure the efficiency of open up firms. Fi nancial structures that permit the schooling of specialized capital by financial intermediaries are essential to economic growth. 1. Introduction. This paper examines how the organisation of financial activities within a country affects economic growth through its impact on how corporations raise and manage funds.

In principle, how well a financial arrangement performs any of its functions sens affect economic growth. 1 For instance, the organization of a countrys payment system affects growth by make it easier for economic agents to trade. Often, policymakers and academics take it as given that savings exi t be invested efficiently, so that firms do ! not matter. This view rests on traditional neoclassical principles. In a simple institution of perfect capital markets and risk-neutral agents, the lodge in rate determines which enthronisation opportunities are worthful and all investment opportunities that are valuable are exploited.2 This is not the world we snappy in. Even though a country has savings, its growth...If you want to furbish up a full essay, order it on our website: OrderCustomPaper.com

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