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Financial Development, Structure and Growth : New Data, Method and Results

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  • Kul B Luintel

    (Cardiff Business School)

  • Khan Mosahid

    (World Intellectual Property Organization, Geneva)

  • Leon-Gonzalez Roberto

    (National Graduate Institute for Policy Studies)

  • Li Guangjie

    (Cardiff Business School)

Abstract

The existing weight of evidence suggests that financial structure (the classification of a financial system as bank-based versus market-based) is irrelevant for economic growth. This contradicts the common belief that the institutional structure of a financial system matters. We re-examine this issue using a novel dataset covering 69 countries over 1989-2011 in a Bayesian framework. Our results are conformable to the belief - a market-based system is relevant - with sizable economic effects for the high-income but not for the middle-and-low-income countries. Our findings provide a counterexample to the weight of evidence. We also identify a regime shift in 2008.

Suggested Citation

  • Kul B Luintel & Khan Mosahid & Leon-Gonzalez Roberto & Li Guangjie, 2016. "Financial Development, Structure and Growth : New Data, Method and Results," GRIPS Discussion Papers 15-27, National Graduate Institute for Policy Studies.
    • Handle: RePEc:ngi:dpaper:15-27
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    JEL classification:

    • G0 - Financial Economics - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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