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Financial development beyond the formal financial market / by Lin Shao.FB3-5/2018-49E-PDF

"This paper studies the effects of financial development, taking into account both formal and informal financing. Using cross-country firm-level data, we document that informal financing is utilized more by rich countries than poor countries. To account for this empirical pattern, we build a model in which the supply of informal financing increases with financial development, while the demand for informal financing declines with it. The model generates a hump-shaped relationship between the incidence of informal financing and GDP per capita. Our analysis shows that, at the early stage of economic development, the output loss from financial frictions is reinforced by the low supply of informal financing. Informal financing contributes more to the aggregate output of the richest countries than to that of the poorer countries in our sample"--Abstract, p. ii.

Permanent link to this Catalogue record:
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Publication information
Department/Agency
  • Bank of Canada.
TitleFinancial development beyond the formal financial market / by Lin Shao.
Series title
  • Bank of Canada staff working paper, 1701-9397 ; 2018-49
Publication typeMonograph - View Master Record
Language[English]
FormatDigital text
Electronic document
Note(s)
  • "September 2018."
  • Includes bibliographical references (p. 24-25).
  • Includes abstract in French.
Publishing information
  • [Ottawa] : Bank of Canada, 2018.
Author / Contributor
  • Shao, Lin.
Descriptionii, 25, 16 p. : col. charts.
Catalogue number
  • FB3-5/2018-49E-PDF
Subject terms
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