Journal Article
Banking and Industrialization
Journal of the European Economic Association, 17(6):1753–1796
Authors
Publication Date
DOI
JEL Classification
R11
O10
N23
Key Words
Related Topics
Digitalization
Globalization
Innovation and Structural Change
International Finance
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.
