Abstract
In recent times, a large body of literature has emerged that asserts the role of financial intermediation in the macroeconomic models.1 The significance of financial institutions, mainly banks, lies in the following activities: (i) banks accept deposits of household savings and lend to a large number of agents; (ii) banks hold liquid reserves against predictable withdrawal demand; (iii) banks issue liabilities that are more liquid than their primary assets; (iv) banks reduce the need for self-financing of investment.
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Das, P.K., Guha-Khasnobis, B. (2008). Finance and Growth: An Empirical Assessment of the Indian Economy. In: Guha-Khasnobis, B., Mavrotas, G. (eds) Financial Development, Institutions, Growth and Poverty Reduction. Studies in Development Economics and Policy. Palgrave Macmillan, London. https://doi.org/10.1057/9780230594029_6
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DOI: https://doi.org/10.1057/9780230594029_6
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