Financial innovations in banking: impact on regional growth

Abstract

This article contributes to the literature on the relationship between finance and growth by analysing the relationships between financial intermediation and economic growth within the regions of one country, rather than different countries. The focus on regions is relevant since regional information is more homogeneous, the legal and institutional factors are similar, and the relevant financial market is more accurately defined. Our study also incorporates the effects of a set of banking innovations. The analysis is undertaken for the Spanish regions. The results show that product and service delivery innovations contribute positively to regional GDP, investment and gross savings growth.