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Modeling Financial Innovation and Economic Growth: Why the Financial Sector Matters to the Real Economy.

The author devises a simple way of incorporating the financial sector into a growth model that is pedagogically useful. Financial innovation raises the efficiency of financial intermediation by increasing the variety of financial products and services, resulting in improved matching of the needs of individual savers with those of firms raising funds for expanding future production.

Source: Chou, Yuan K
Link: Journal of Economic Education 


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