Banking sector, structural change and economic dynamics

In this paper, an attempt is made to include banking in Pasinetti's natural economic system. Pasinetti introduces the central bank in his analysis, but not commercial banks, and only discusses loans between workers and the interest rate linked to these. Considering the literature of the ‘Panico- Shaikh’ models, which represent the bank as a particular ‘industry’, the next step is to analyse and discuss which assumptions of Pasinetti's natural system should be modified to include the banking sector. These modifications turn out to be minor and the introduction of banking does not upset the Pasinetti’s system but rather enriches it with an important element of the contemporary capitalist economy. Finally, considering Pasinetti's system applicable to a planned economy, the role of finance in this type of economy is discussed.