Conference Paper
Local State Capacity and Economic Development of Regions
No.
ERF29AC_21
Publisher
ERF
Date
May, 2023
This paper studies the impact of local state capacity on the economic development of regions. We exploit a change in the municipal structure of Turkey in 2012 that converted 14 municipalities to metropolitan municipalities. Metropolitan municipalities have more control over local county municipalities and a larger budget. Using credit registry and firm balance sheet data, we show that local firms' long-term loans from privately-owned banks and employment increased in the new metropolitan provinces despite no effect on productivity. The effects on both outcomes emerge when the legislation was enacted and the size of the effects grow over time after the implementation of the law.
Research Fellows
Abdurrahman Aydemir
Full Professor of Economics, Faculty of Arts...
Authors
Yusuf Emre Akgündüz
Faculty Member, Faculty of Arts and Social...
Authors
Yusuf Kenan Bagır
Central Bank of Republic of Turkey
Authors
Yavuz Selim Hacıhasanoğlu
Deputy Executive Director, Research and Monetary Policy...