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Financial structure and growth

Author

Listed:
  • Leonardo Gambacorta
  • Jing Yang
  • Kostas Tsatsaronis

Abstract

Up to a point, banks and markets both foster economic growth. Beyond that limit, expanded bank lending or market-based financing no longer adds to real growth. But when it comes to moderating business cycle fluctuations, banks and markets differ considerably in their effects. In normal downturns, healthy banks help to cushion the shock but, when recessions have coincided with financial crises, we find that the impact on GDP has been three times as severe for bank-oriented economies as it has for market-oriented ones.

Suggested Citation

  • Leonardo Gambacorta & Jing Yang & Kostas Tsatsaronis, 2014. "Financial structure and growth," BIS Quarterly Review, Bank for International Settlements, March.
  • Handle: RePEc:bis:bisqtr:1403e
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    References listed on IDEAS

    as
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    2. Peia, Oana & Roszbach, Kasper, 2015. "Finance and growth: Time series evidence on causality," Journal of Financial Stability, Elsevier, vol. 19(C), pages 105-118.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Eisele, Alexander & Nowak, Eric, 2017. "The Real Effects of Improving Access to Capital Markets Financing: Evidence from European SMEs," CEPR Discussion Papers 12227, C.E.P.R. Discussion Papers.
    2. repec:bla:devpol:v:36:y:2018:i:s2:p:o954-o983 is not listed on IDEAS
    3. Emiel van Bezooijen & Jacob Bikker, 2017. "Financial structure and macroeconomic volatility: a panel data analysis," DNB Working Papers 568, Netherlands Central Bank, Research Department.
    4. Esti Kemp & Rene van Stralen & Alexandros Vardoulakis & Peter J. Wierts, 2018. "The Non-Bank Credit Cycle," Finance and Economics Discussion Series 2018-076, Board of Governors of the Federal Reserve System (US).
    5. Michael Brei & Giovanni Ferri & Leonardo Gambacorta, 2018. "Financial structure and income inequality," BIS Working Papers 756, Bank for International Settlements.
    6. Lenz, Rainer, 2015. "Banking 2025: The Bank of the Future," EconStor Preprints 110466, ZBW - Leibniz Information Centre for Economics.
    7. repec:taf:apeclt:v:26:y:2019:i:7:p:561-575 is not listed on IDEAS
    8. Iñaki Aldasoro & Robert Unger, 2017. "External financing and economic activity in the euro area - why are bank loans special?," BIS Working Papers 622, Bank for International Settlements.
    9. Luintel, Kul B. & Khan, Mosahid & Leon-Gonzalez, Roberto & Li, Guangjie, 2016. "Financial development, structure and growth: New data, method and results," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 43(C), pages 95-112.
    10. Jérôme Creel & Paul Hubert & Fabien Labondance, 2017. "Financialisation Risks and Econmic Performance," Documents de Travail de l'OFCE 2017-21, Observatoire Francais des Conjonctures Economiques (OFCE).
    11. Lee, Chien-Chiang & Lin, Chun-Wei & Zeng, Jhih-Hong, 2016. "Financial liberalization, insurance market, and the likelihood of financial crises," Journal of International Money and Finance, Elsevier, vol. 62(C), pages 25-51.
    12. repec:pal:compes:v:60:y:2018:i:1:d:10.1057_s41294-018-0056-6 is not listed on IDEAS
    13. Jack Bekooij & Jon Frost & Remco van der Molen & Krzysztof Muzalewski, 2016. "Hazardous tango: Sovereign-bank interdependencies across countries and time," DNB Working Papers 541, Netherlands Central Bank, Research Department.
    14. Loayza,Norman V. & Ouazad,Amine & Ranciere,Romain, 2017. "Financial development, growth, and crisis: is there a trade-off ?," Policy Research Working Paper Series 8237, The World Bank.
    15. Oliver Denk & Sebastian Schich & Boris Cournède, 2015. "Why implicit bank debt guarantees matter: Some empirical evidence," OECD Journal: Financial Market Trends, OECD Publishing, vol. 2014(2), pages 63-88.
    16. Jan Kakes & Rob Nijskens, 2018. "Size of the banking sector: implications for financial stability," DNB Occasional Studies 1606, Netherlands Central Bank, Research Department.
    17. Boukhatem, Jamel, 2016. "Assessing the direct effect of financial development on poverty reduction in a panel of low- and middle-income countries," Research in International Business and Finance, Elsevier, vol. 37(C), pages 214-230.
    18. repec:eee:riibaf:v:45:y:2018:i:c:p:427-434 is not listed on IDEAS
    19. Claessens, Stijn, 2017. "Regulation and structural change in financial systems," CEPR Discussion Papers 11822, C.E.P.R. Discussion Papers.
    20. Benczur, Peter & Karagiannis, Stylianos & Kvedaras, Virmantas, 2017. "Finance and economic growth: financing structure and non-linear impact," Working Papers 2017-07, Joint Research Centre, European Commission (Ispra site).
    21. Jameel Ahmed, 2016. "Credit Conditions in Pakistan: Supply Constraints or Demand Deficiencies?," The Developing Economies, Institute of Developing Economies, vol. 54(2), pages 139-161, June.
    22. Unger, Robert, 2018. "Revisiting the finance and growth nexus: A deeper look at sectors and instruments," Discussion Papers 55/2018, Deutsche Bundesbank.
    23. Emmanuel Carré & Guillaume L’œillet, 2018. "The Literature on the Finance–Growth Nexus in the Aftermath of the Financial Crisis: A Review," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(1), pages 161-180, March.
    24. Popov, Alexander, 2017. "Evidence on finance and economic growth," Working Paper Series 2115, European Central Bank.
    25. repec:gam:jijfss:v:6:y:2018:i:2:p:57-:d:150855 is not listed on IDEAS

    More about this item

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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