Book contents
- Prospects for Economic Growth in the United States
- Prospects for Economic Growth in the United States
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Notes on Contributors
- Foreword
- Preface
- Acknowledgments
- Part I Overview
- Part II Labor and Economic Growth
- Part III Implications of Technology for Growth
- Part IV The Effects of Fiscal Policy on Growth
- Part V Special Topics on Economic Growth
- 9 Banking on Prosperity
- 10 Economic Growth and Income Inequality: Insights from the Representative Consumer Theory of Distribution
- Part VI A Concluding Perspective
- Index
- References
9 - Banking on Prosperity
from Part V - Special Topics on Economic Growth
Published online by Cambridge University Press: 21 October 2021
By
Book contents
- Prospects for Economic Growth in the United States
- Prospects for Economic Growth in the United States
- Copyright page
- Dedication
- Contents
- Figures
- Tables
- Notes on Contributors
- Foreword
- Preface
- Acknowledgments
- Part I Overview
- Part II Labor and Economic Growth
- Part III Implications of Technology for Growth
- Part IV The Effects of Fiscal Policy on Growth
- Part V Special Topics on Economic Growth
- 9 Banking on Prosperity
- 10 Economic Growth and Income Inequality: Insights from the Representative Consumer Theory of Distribution
- Part VI A Concluding Perspective
- Index
- References
Summary
Banks provide vital services to the economy: mobilizing, allocating, and monitoring the use of savings, by firms and individuals; providing mechanisms for pooling and managing risks; and facilitating trade in goods, services, and securities. When banking systems perform well, for example by improving the allocation of resources, they accelerate long-run economic growth. Furthermore, better-functioning banks disproportionately help lower-income families by funneling capital to the most promising entrepreneurs, rather than to those from the most connected families. By improving the efficiency of capital allocation, better-functioning banks create a more competitive environment in which workers face more dynamic labor markets, thus enhancing the economic opportunities available to people who may never receive a loan or start a business. Recent research also finds that regulatory reforms that spur competition among banks not only improve the economy; they also lower crime, ease financing constraints, increase schooling, shrink racial wage gaps, and help alleviate mental depression. This suggests important connections between finance and prosperity.
Keywords
- Type
- Chapter
- Information
- Prospects for Economic Growth in the United States , pp. 247 - 262Publisher: Cambridge University PressPrint publication year: 2021
References
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