Autore
Capasso, Salvatore

Titolo
Financial Markets Development and Economic Growth: Tales of Informational Asymmetries
Periodico
Università degli Studi di Napoli 'Parthenope' - Istituto di Studi Economici. Working paper
Anno: 2003 - Volume: 2 - Fascicolo: 2 - Pagina iniziale: 1 - Pagina finale: 32

The development of financial system is very often characterised by the development of innovative financial contracts which allow a more efficient allocation of resources and a higher level of capital productivity and economic growth. By exploiting the microeconomic theory of the optimal financial contract under asymmetric information, economics have recently managed to shed new light on the well studied issue of the relationship between the financial market development and economic growth. This paper revises the most recent progress of the literature which shows that the amount of information asymmetry in the credit market and the degree of the heterogeneity between borrowers (typically firms) and lenders (typically workers or savers) determine the nature of the financial system. Differences in endowments and in the level of information distribution can give rise to very different financial contracts which affect, and in turn are affected, by capital accumulation and growth.




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