1.

Record Nr.

UNINA9910808874703321

Autore

Ramcharan Rodney

Titolo

Does economic diversification lead to financial development? : evidence from topography / / prepared by Rodney Ramcharan

Pubbl/distr/stampa

[Washington, D.C.], : International Monetary Fund, Research Dept., 2006

ISBN

1-4623-6999-5

1-4527-6932-X

1-283-51685-3

9786613829306

1-4519-0831-8

Edizione

[1st ed.]

Descrizione fisica

1 online resource (45 p.)

Collana

IMF working paper ; ; WP/06/35

Soggetti

Economic development - Econometric models

Finance - Econometric models

Lingua di pubblicazione

Inglese

Formato

Materiale a stampa

Livello bibliografico

Monografia

Note generali

"January 2006."

Nota di bibliografia

Includes bibliographical references.

Nota di contenuto

""Contents""; ""I. INTRODUCTION""; ""II. EMPIRICAL FRAMEWORK AND DATA OVERVIEW""; ""III. MAIN RESULTS""; ""IV. SENSITIVITY ANALYSES""; ""V. DISCUSSION""; ""References""

Sommario/riassunto

An influential theoretical literature has observed that economic diversification can reduce risk and increase financial development. But causality operates in both directions, as a well functioning financial system can enable a society to invest in more productive but risky projects, thereby determining the degree of economic diversification. Thus, ordinary least squares (OLS) estimates of the impact of economic diversification on financial development are likely to be biased. Motivated by the economic geography literature, this paper uses instruments derived from topographical characteristics to estimate the impact of economic diversification on the development of finance. The fourth estimates suggest a large and robust role for diversification in shaping financial development. And these results imply that, by impeding financial sector development, the concentration of economic activity common in developing countries can adversely affect financial



and economic development.