Financial Frictions, Financial Market Development, and Macroeconomic Development
This paper reviews the state of knowledge on the impact of financial frictions and financial underdevelopment on firms
Abstract
This paper reviews the state of knowledge on the impact of financial frictions and financial underdevelopment on firms. The focus is on their aggregate and distributional consequences for the macroeconomies of developing countries. It then reviews available data and data needs for future progress and proposes an agenda of important but unanswered questions for informing our understanding of growth and policy. Various questions involve ways to promote financial development itself, guide second-best policies in the face of financial frictions that enable macrodevelopment, and to develop an inclusive financial system that benefits all.
This is an output of the Structural Transformation and Economic Growth (STEG) programme
Citation
Kaboski, J. P. (2021) “Financial Frictions, Financial Market Development, and Macroeconomic Development” STEG Pathfinding Paper
Link
Financial Frictions, Financial Market Development, and Macroeconomic Development