Abstract
An endogenous growth model with multiple assets is developed. Agents who face random future liquidity needs accumulate capital and a liquid, but unproductive asset. The effects of introducing financial intermediation into this environment are considered. Conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital, causing intermediation to be growth promoting. In addition, intermediaries generally reduce socially unnecessary capital liquidation, again tending to promote growth.
Keywords
Financial intermediaryIntermediationEndogenous growth theoryIntermediaryMarket liquidityEconomicsAsset (computer security)Monetary economicsCapital (architecture)FinanceMarket economyHuman capital
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Publication Info
- Year
- 1991
- Type
- article
- Volume
- 58
- Issue
- 2
- Pages
- 195-195
- Citations
- 2114
- Access
- Closed
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Cite This
Valerie R. Bencivenga,
Bruce D. Smith
(1991).
Financial Intermediation and Endogenous Growth.
The Review of Economic Studies
, 58
(2)
, 195-195.
https://doi.org/10.2307/2297964
Identifiers
- DOI
- 10.2307/2297964