Why do financial systems differ? History matters
We 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
|Date of creation:||Feb 2005|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 69 1344 0
Fax: +49 69 1344 6000
Web page: http://www.ecb.europa.eu/Email:
More information through EDIRC
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.:
- O. Emre Ergungor, 2003. "Financial system structure and economic development: structure matters," Working Paper 0305, Federal Reserve Bank of Cleveland.
- Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-81, September.
- Sandeep Baliga & Ben Polak, 2001.
"The Emergence and Persistence of the Anglo-Saxon and German Financial Systems,"
Economics Working Papers
0005, Institute for Advanced Study, School of Social Science.
- Sandeep Baliga, 2004. "The Emergence and Persistence of the Anglo-Saxon and German Financial Systems," Review of Financial Studies, Society for Financial Studies, vol. 17(1), pages 129-163.
- Levine, Ross & Zervos, Sara, 1996.
"Stock markets, banks, and economic growth,"
Policy Research Working Paper Series
1690, The World Bank.
- Mathias Dewatripont & Eric Maskin, 2004.
"Credit and efficiency in centralized and decentralized economies,"
ULB Institutional Repository
2013/9605, ULB -- Universite Libre de Bruxelles.
- Dewatripont, M & Maskin, E, 1995. "Credit and Efficiency in Centralized and Decentralized Economies," Review of Economic Studies, Wiley Blackwell, vol. 62(4), pages 541-55, October.
- Mathias Dewatripont & Eric Maskin, 1995. "Credit and efficiency in centralized and decentralized economies," ULB Institutional Repository 2013/9603, ULB -- Universite Libre de Bruxelles.
- Raghuram G. Rajan & Luigi Zingales, 1996.
"Financial Dependence and Growth,"
NBER Working Papers
5758, National Bureau of Economic Research, Inc.
- Michie, Ranald C., 1986. "The London and New York Stock Exchanges, 1850–1914," The Journal of Economic History, Cambridge University Press, vol. 46(01), pages 171-187, March.
- Ergungor, O. Emre, 2004. "Market- vs. bank-based financial systems: Do rights and regulations really matter?," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 2869-2887, December.
- Ross Levine, 1997.
"Financial Development and Economic Growth: Views and Agenda,"
Journal of Economic Literature,
American Economic Association, vol. 35(2), pages 688-726, June.
- Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
- Rajan, Raghuram G. & Zingales, Luigi, 2003. "The great reversals: the politics of financial development in the twentieth century," Journal of Financial Economics, Elsevier, vol. 69(1), pages 5-50, July.
- Sylla, Richard, 1969. "Federal Policy, Banking Market Structure, and Capital Mobilization in the United States, 1863–1913," The Journal of Economic History, Cambridge University Press, vol. 29(04), pages 657-686, December.
- Patrick Bolton & Xavier Freixas, 2000. "Equity, Bonds, and Bank Debt: Capital Structure and Financial Market Equilibrium under Asymmetric Information," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 324-351, April.
- Tilly, Richard, 1982. "Mergers, External Growth, and Finance in the Development of Large-Scale Enterprise in Germany, 1880–1913," The Journal of Economic History, Cambridge University Press, vol. 42(03), pages 629-658, September.
- Fohlin, Caroline, 2002. "Regulation, taxation and the development of the German universal banking system, 1884 1913," European Review of Economic History, Cambridge University Press, vol. 6(02), pages 221-254, August.
- Timothy W. Guinnane, 2002. "Delegated Monitors, Large and Small: Germany's Banking System, 1800–1914," Journal of Economic Literature, American Economic Association, vol. 40(1), pages 73-124, March.
- Richard Tilly, 1998. "Universal Banking in Historical Perspective," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(1), pages 7-, March.
- Levine, Ross, 1999. "Law, Finance, and Economic Growth," Journal of Financial Intermediation, Elsevier, vol. 8(1-2), pages 8-35, January.
- Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, vol. 60(5), pages 1127-50, September.
When requesting a correction, please mention this item's handle: RePEc:ecb:ecbwps:20050442. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Official Publications)
If references are entirely missing, you can add them using this form.