Why do financial systems differ? History matters
AbstractWe describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize financial market lending are more likely to continue doing so in the future, all else equal. JEL Classification: L16, G10, G20, N20
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Date of creation: Feb 2005
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Other versions of this item:
- Cyril Monnet & Erwan Quintin, 2005. "Why do financial systems differ? History matters," 2005 Meeting Papers 275, Society for Economic Dynamics.
- Cyril Monnet & Erwan Quintin, 2004. "Why do financial systems differ? History matters," Center for Latin America Working Papers 0304, Federal Reserve Bank of Dallas.
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-10-05 (All new papers)
- NEP-DGE-2005-10-06 (Dynamic General Equilibrium)
- NEP-FIN-2005-10-04 (Finance)
- NEP-FMK-2005-10-15 (Financial Markets)
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