Land Distribution and Financial System Development
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Summary:
Research on credit markets from developing economies, as well as work on the origin of institutions in general, has suggested that land inequality may play a role in determining financial development. In this paper we establish empirically that initial land inequality is a significant predictor of financial depth across countries, even while controlling for other predictors such as legal origin, ethnic fractionalization, and income inequality. To examine this relationship we have created a new measure of land distribution within countries that builds upon the work of Deininger and Squire (1998) by explicitly accounting for landlessness. In addition to being a significant predictor of financial development, land inequality is found to be uncorrelated with other fundamental characteristics of economies, suggesting its possible use in a wider range of research.
Series:
Working Paper No. 2007/083
Subject:
Commercial banks Financial sector development Income distribution Income inequality Legal support in revenue administration
English
Publication Date:
April 1, 2007
ISBN/ISSN:
9781451866476/1018-5941
Stock No:
WPIEA2007083
Pages:
30
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