Solidarity finance and economic growth: Case of financial intermediation (A theoretical approach)

Abstract

The role of financial intermediation has been illustrated in the finance literature. In addition to performing specialized tasks, several theoretical models postulate that they mitigate the costs associated with acquiring information and conducting financial transactions (Benston & Smith, 1976). Moreover, several studies have found that financial intermediation does more than reduce costs. It provides insurance and risk sharing (Allen & Gale, 1997, 2004), stimulates the financing of liquidity needs through credit lines (Holmstrom & Tirole, 1998), and helps create specialized products (Benston & Smith, 1976). The aim of this article is to describe and understand the economic and social role of intermediation in solidarity finance and present its contribution to economic growth. We first present the conventional theory of financial intermediation. Then, in second place, we discuss the different research works as well as the main empirical results when studying the relationship between financial intermediation and economic growth. Then, we highlight the form and the important place of intermediation in solidarity finance. Finally, we conclude with the study of relational financing in solidarity finance. We adopt the interpretive paradigm, whose aim is to bring out the deep meaning of intermediation in solidarity finance, which is still embryonic in Morocco. However, our work is purely theoretical due to the absence of empirical statistics at the national level.