Liquidity needs and vulnerability to financial underdevelopment
This paper provides evidence that financial development has a large causal effect in the reduction of macroeconomic volatility resulting from the role of the financial system in liquidity provision. In particular, financial system development leads to a comparatively larger reduction in the volatili...
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| Veröffentlicht in: | Journal of financial economics 2006-06, Vol.80 (3), p.677-722 |
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| container_title | Journal of financial economics |
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| creator | Raddatz, Claudio |
| description | This paper provides evidence that financial development has a large causal effect in the reduction of macroeconomic volatility resulting from the role of the financial system in liquidity provision. In particular, financial system development leads to a comparatively larger reduction in the volatility of output in sectors with high liquidity needs. Most of this decline results from the stabilization of the output of existing firms, although the volatility of the number of firms also drops significantly. Among different aspects of the financial system, the depth of financial intermediaries plays the main role in the reduction of volatility. |
| doi_str_mv | 10.1016/j.jfineco.2005.03.012 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0304-405X |
| ispartof | Journal of financial economics, 2006-06, Vol.80 (3), p.677-722 |
| issn | 0304-405X 1879-2774 |
| language | eng |
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| source | RePEc; Elsevier ScienceDirect Journals Complete |
| subjects | Capital markets Economic development Economic volatility Financial development Impact analysis Liquidity Liquidity needs Macroeconomics Studies Volatility |
| title | Liquidity needs and vulnerability to financial underdevelopment |
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