|Title||Communication links, Productivity, knowledge transfers, growth and income distribution|
In this study, we show that banking development, communication links, productivity and income distribution exert a statistically and economically significant positive impact on local economic growth. This effect becomes more pronounced when the financial sector is more liberalized and deregulated. Preceded by the global changes that occurred since the mid-1980s and 1990s, the world has seen continued economic liberalization, increasing privatization and gradual loosening of credit/capital controls by states. The lifting of state controls in the banking sector in the 1980s and 1990s, created a more integrated and competitive financial industry ensuring efficient allocation of bank credits to productive areas.