Contribution of Rural Banks to Regional Economic Development: Evidence from the Philippines

MESLIER-CROUZILLE C., NYS E. and SAUVIAT A. Contribution of rural banks to regional economic development: evidence from the Philippines, Regional Studies. The paper examines the link between banking and economic development in the Philippine regions and it focuses on the role of rural banks using a co-integration panel data analysis (1993-2005). No clear-cut evidence is found of a positive influence of banking development measured by traditional indicators built at the regional level for the whole banking industry. However, a consistent positive effect of rural banks is found in the intermediate and less-developed regions, with a stronger effect for the former, suggesting a threshold effect. Estimations on rolling subsamples confirm the differentiated impact of rural banks depending on the stage of regional development.