"Financial Efficiency and Economic Growth : The case of Spain". International Advances in Economic Research, Nov. 1997, p. 333-351.

This paper explores the connection between financial efficiency and economic growth. First, it presents a theoretical endogenous model in which financial efficiency enhances economic growth by means of increasing the marginal productivity of a broad concept of capital. Next, some data from the Spanish economy over the period 1962-1995 are explored using cointegration techniques. The main results point out to a prominent role of bank institutions in channeling funds from saving to investment. Operative inefficiency of banks has damaged economic growth by diverting a certain amount of funds, that otherwise could have been invested and hence fostered develoment in a larger degree. These results also suggest the existence of imperfections in Spanish capital markets over the period considered. Finally, some indicators of financial repression such as negative interest rates and inflation seem to have had a deleterious impact on economic growth.

JEL codes: 040, E44.