In market economies financial intermediaries develop during the early stages of
industrialization. This paper argues that it occurs because as firms specialize the number
of transactions involving credit increases. The main conclusions of the paper are: (a) when
increased specialization is a necessary condition for growth, sustained growth may not
start if financial intermediaries do not emerge. In this sense, intermediaries are a necessary condition for growth to start and persist; (b) when firms specialize intermediaries
endogenously emerge, because they prevent the duplication of monitoring effort. Thus, il
is specialization in the real sector which causes the emergence of intermediaries.