The finance-growth nexus: The role of banks

We contribute to the finance-growth nexus literature by showing that credit origin, bank ownership, type of credit, and matter in economic growth. use a unique dataset covering 5555 cities Brazil, with granular information on characteristics. find non-earmarked corporate sector is associated municipal growth more strongly than earmarked despite increase relevance latter after global financial crisis. also credit—whether loans are general purpose or for specific purpose—is different ways. Overall, provided domestic private banks correlated higher rates. In contrast, relationship between from state-owned becomes statistically significant only Although we follow our empirical exercises using internal instruments generalized method moments (GMM) estimations, conduct robustness tests two additional external instruments: number complaints filed against each local accessibility. Our findings same respect traditional GMM estimations.