Credit and growth: Reconsidering Italian industrial policy during the Golden Age

Abstract

Thecredit systeminthe growth process of post-WorldWar II Italy has often been dismissed as awaste ofmoneyor ancillary to industrialization at best. This paper provides evidence of both an industrialization strategy driven by credit deepening and the beneficial role played by credit systems in growth. By using a new data set of long-run loans to industrial manufacturing sectors, broken down by area, we find in the long run a strong and positive effect of credit deepening on the value added per worker in the Italian economy during the Golden Age (1955-1970). © European Historical Economics Society 2013.