The permanent effects of innovation on financial depth: Theory and US historical evidence from unobservable components models

• 成果类型: Article
• 署名作者: Rousseau, PL
• 署名单位: Vanderbilt University
• 刊物名称: JOURNAL OF MONETARY ECONOMICS
• ISSN/ISSBN: 0304-3932
• DOI: 10.1016/S0304-3932(98)00027-0
• 发表日期: 1998
• 页码: 387-425
• 关键词: financial deepening; financial efficiency; unobservable components; Kalman filtering

摘要

This paper examines links between innovation in the US intermediating sector and financial deepening from 1872-1929. Technical progress is modeled in a credit-rationing framework with limited liability as an enhanced ability of intermediaries to monitor loan recipients. This allows an innovating lender to earn temporary rents by lowering loan rates and inducing firms with higher repayment prospects to apply. Rents persist until others adopt the improvement and competition for loanable funds raises the deposit rate. Subsequent deposits ensure that more funds are channeled to projects of higher average quality. The link between the loan-deposit spread and financial deepening implied by the model is then examined in an unobservable components framework. The finding that permanent reductions of 1% in the spread of New York banks are associated with increases in financial depth that range from 1.7% to nearly:4% is consistent with a role for efficiency improvements in the rapid financial deepening that characterized the pre-1930 US economy. (C) 1998 Elsevier Science B.V. All rights reserved.