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The Efficiency and Stability of Banks and Markets

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  • Franklin Allen

    () (University of Pennsylvania)

Abstract

Traditionally, financial systems have been bank-based or market-based. The efficiency properties of these systems are compared in various dimensions. These include risk sharing, information provision, funding new industries, corporate governance, and law, finance and politics. Both systems have advantages and disadvantages. With regard to stability, both bank-based and market-based systems are subject to crises. Going forward a financial system with financial intermediaries and markets would have many advantages and few disadvantages.

Suggested Citation

  • Franklin Allen, 2004. "The Efficiency and Stability of Banks and Markets," Working Paper Research 52, National Bank of Belgium.
  • Handle: RePEc:nbb:reswpp:200405-8
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    File URL: https://www.nbb.be/doc/oc/repec/reswpp/wp52.pdf
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    References listed on IDEAS

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