This paper uses a new methodology based on industry comovement to examine the role of financial market development in intersectoral allocation. Based on the assumption that there exist common global shocks to growth opportunities, we hypothesize that country pairs should have correlated patterns...

We revisit an earlier, highly influential paper on financial dependence and growth by Rajan and Zingales (1998). We re-examine their assumptions, and the robustness of their results to alternative theories and interpretations. We first show that they may be implicitly testing whether financial...

Recent work suggests that financial development is important for economic growth, since financial markets more effectively allocate capital to firms with high value projects. For firms in poorly developed financial markets, implicit borrowing in the form of trade credit may provide an...