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Are bank-based or market-based financial systems better?

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  • Ross Levine

Abstract

For over a century, economists and policy makers have debated the relative merits of bank-based versus market-based financial systems. Recently, however, proponents of the legal-based view of financial development have argued that the century long debate concerning bank-based versus market-based financial systems is analytically vacuous. According to this view, the critical issue is establishing a legal environment in which both banks and markets can operate effectively. This paper represents the first broad, cross-country examination of which view of financial structure and economic growth is most consistent with the data.

Suggested Citation

  • Ross Levine, 2000. "Are bank-based or market-based financial systems better?," Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 3(1), pages 25-55, April.
  • Handle: RePEc:chb:bcchec:v:3:y:2000:i:1:p:25-55
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    References listed on IDEAS

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    Cited by:

    1. Robert Webb & Matthias Beck & Roddy McKinnon, 2003. "Problems and Limitations of Institutional Investor Participation in Corporate Governance," Corporate Governance: An International Review, Wiley Blackwell, pages 65-73.
    2. Garretsen, Harry & Lensink, Robert & Sterken, Elmer, 2004. "Growth, financial development, societal norms and legal institutions," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 14(2), pages 165-183, April.
    3. Giampaolo Gabbi & Elisa Ticci, 2014. "Implications of financialisation for sustainability," Working papers wpaper47, Financialisation, Economy, Society & Sustainable Development (FESSUD) Project.
    4. Garretsen, Harry & Lensink, Robert & Sterken, Elmer, 2000. "Development of stock markets, societal norms and legal institutions," CCSO Working Papers 200002, University of Groningen, CCSO Centre for Economic Research.

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