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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/26293

Title: The Equilibrium Size of the Financial Sector
Authors: Philippon, Thomas
Issue Date: Aug-2007
Series/Report no.: FIN-07-007
Abstract: Over the past 60 years, the value added of the U.S. financial sector has grown from 2.3% to 7.7% of GDP. I present a model of the equilibrium size of this industry and I study the factors that might explain its evolution. According to the model, a shift in the joint distribution of cash flows and investment opportunities across U.S. firms has increased the demand for financial services. Improvements in the relative efficiency of the finance industry also play a role. Without these improvements, a much larger fraction of firms would be financially constrained today.
URI: http://hdl.handle.net/2451/26293
Appears in Collections:Finance Working Papers

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