Measuring the Impact of Financial Intermediation: Linking Contract Theory to Econometric Policy Evaluation

Robert M. Townsend and Sergio Urzua. Macroeconomic Dynamics, September 2009, 13(S2): 268-316.

Townsend and Urzua study the impact that financial intermediation can have on productivity through the alleviation of credit constraints in occupation choice and/or an improved allocation of risk. They bring together both static and dynamic structural models, as well as reduced form OLS and IV regressions. LINK