Banking and industrialization
Abstract
We establish a causal role for banking access in the spread of the Industrial Revolution over the period 1817–1881 by exploiting unique employment data from 10,528 parishes across England and Wales and a novel instrument. We estimate that a one standard deviation increase in 1817 finance employment increases annualized industrial employment growth by 0.93 percentage points. We establish the role of structural transformation as an underlying growth mechanism and show that banking access: (i) increases the industrial employment share; (ii) stimulates urbanization; and (iii) fosters inter-industry transition to high TFP, intermediate and capital-intensive sub-sectors.
Citation
Heblich , S & Trew , A 2019 , ' Banking and industrialization ' , Journal of the European Economic Association , vol. 17 , no. 6 , pp. 1753-1796 . https://doi.org/10.1093/jeea/jvy037
Publication
Journal of the European Economic Association
Status
Peer reviewed
ISSN
1542-4766Type
Journal article
Description
Research for this paper was supported by the Institute for New Economic Thinking (INET) Grant No. INO15-00025.Collections
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