Congresos y reuniones científicas
Título:
Financial Development and Industry Diversification
Reunión:
Congreso; XLVIII Reunión Anual de la Asociación Argentina de Economía Política; 2013
Institución organizadora:
Universidad Nacional de Rosario
Resumen:
This paper empirically and theoretically studies industry or sec-
tor diversication as a determinant to nancial development. The
empirical evidence nds evidence that there is a robust relationship
between industry (or sector) diversication and nancial development.
The theoretical model explains these results by modeling the endoge-
nous development of the nancial system as a result of industry (or
sector) diversication. An economy with more sectors (industry di-
versication) imply a greater opportunity for diversifying lending risk
and thus a reduction in the aggregate risk of the nancial system.
This reduction in the aggregate risk of the nancial system is what de-
termines nancial development. The policy implications are that the
government should promote the creation of new industrial sectors by
subsidizing R&D and horizontal innovation