Regional Evidence on the Finance - Growth Nexus

The Finance-Growth Nexus is a classical source of debate among economists. This contribution offers regional evidence on this issue in order to see if it can meet the data within a 140 years old economic union -- Italy -, in the ideal context for its main competitor - New Economic Geography - and in order to avoid pooling between developed and developing countries. The results for this application support the view that finance leads growth, reject its possible endogeneity and shows its robustness even in presence of spatial unobserved heterogeneity by using both cross-section and panel data estimators.