Comparing Financial Systems: A structural Analysis

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Comparing Financial Systems: A structural Analysis

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Sylvain Champonnois () (Economics Princeton University)

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Sylvain Champonnois

Abstract

This paper investigates whether the financial markets are relatively more efficient than banks in the UK than in continental Europe. The UK channels a larger fraction of the financial flow to the firms through financial markets than continental Europe but this is explained by larger firms in the UK, not relatively more efficient markets. This conclusion is drawn from an industry-level structural estimation using data on the UK, France, Germany and Italy. The structural model is based on a novel theory of capital allocation and investment in which the decisions of heterogenous firms across financing instruments are aggregated in closed-form

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Paper provided by Society for Economic Dynamics in its series 2006 Meeting Papers with number 520.

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Date of creation: 03 Dec 2006
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Handle: RePEc:red:sed006:520

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Paper
- Sylvain Champonnois, 2006. "Comparing financial systems - a structural analysis," Working Paper Series 702, European Central Bank. [Downloadable!]

Find related papers by JEL classification:
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Investment Policy

This paper has been announced in the following NEP Reports:

NEP-ALL-2007-01-13 (All new papers)
NEP-BAN-2007-01-13 (Banking)
NEP-EEC-2007-01-13 (European Economics)
NEP-FMK-2007-01-13 (Financial Markets)
NEP-MAC-2007-01-13 (Macroeconomics)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Rasmus Rüffer & Marcelo Sánchez & Jian-Guang Shen, 2007. "Emerging Asia’s growth and integration - how autonomous are business cycles?," Working Paper Series 715, European Central Bank. [Downloadable!]

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