IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Political Origins of Financial Structure

  • Sambit Bhattacharyya

There is a growing policy interest in the role of financial structure in promoting development.� However, very little is known about how different financial structures emerge and evolve.� In this paper we empirically assess the political origins of financial structure.� Using difference-indifference estimaton and annual data, we study the effects of democratization on financial structure in a sample of 96 countries covering the period 1970 to 2005.� Democratization here corresponds to the event of becoming a democracy.� We find that democratization leads to a more market-based financial system.� Democractic change could also be incremental rather than a one off.� To identify the causal effect of incremental democratic change on financial structure we estimate a separate model and find that democracy matters.� We also find that countries with substantial democratic capital are more likely to have a market-based financial structure.� Our main results are robust to a variety of controls, instrumental variable estimation using commodity price and rainfall as instruments, Arellano-Bond GMM estimation, alternative measures of democracy and financial structure, and across different samples.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.csae.ox.ac.uk/workingpapers/pdfs/csae-wps-2011-20.pdf
Download Restriction: no

Paper provided by University of Oxford, Department of Economics in its series Economics Series Working Papers with number WPS/2011-20.

as
in new window

Length:
Date of creation: 01 Oct 2011
Date of revision:
Handle: RePEc:oxf:wpaper:wps/2011-20
Contact details of provider: Postal: Manor Rd. Building, Oxford, OX1 3UQ
Web page: http://www.economics.ox.ac.uk/
Email:


More information through EDIRC

References listed on IDEAS
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.:

as in new window
  1. Francesco Giavazzi & Guido Tabellini, 2004. "Economic and Political Liberalizations," Levine's Bibliography 122247000000000724, UCLA Department of Economics.
  2. Solomon Tadesse, 2001. "Financial Architecture and Economic Performance: International Evidence," William Davidson Institute Working Papers Series 449, William Davidson Institute at the University of Michigan.
  3. Torsten Persson & Guido Tabellini, 2006. "Democracy and Development: The Devil in the Details," Working Papers 302, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. repec:ner:tilbur:urn:nbn:nl:ui:12-3125426 is not listed on IDEAS
  5. Sambit Bhattacharyya & Roland Hodler, 2010. "Do Natural Resource Revenues Hinder Financial Development?� The Role of Political Institutions," Economics Series Working Papers CSAE WPS/2010-40, University of Oxford, Department of Economics.
  6. repec:ner:tilbur:urn:nbn:nl:ui:12-3508406 is not listed on IDEAS
  7. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
  8. repec:ner:tilbur:urn:nbn:nl:ui:12-3125514 is not listed on IDEAS
  9. Romain Wacziarg & Karen Horn Welch, 2003. "Trade Liberalization and Growth: New Evidence," NBER Working Papers 10152, National Bureau of Economic Research, Inc.
  10. 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.
  11. John H. Boyd & Bruce D. Smith, 1995. "The evolution of debt and equity markets in economic development," Working Papers 542, Federal Reserve Bank of Minneapolis.
  12. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2004. "The Role of Social Capital in Financial Development," American Economic Review, American Economic Association, vol. 94(3), pages 526-556, June.
  13. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2002. "Law, Endowment, and Finance," NBER Working Papers 9089, National Bureau of Economic Research, Inc.
  14. Marco Pagano & Paolo Volpin, 2001. "The Political Economy of Finance," CSEF Working Papers 76, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  15. Yang, Benhua, 2011. "Political democratization, economic liberalization, and growth volatility," Journal of Comparative Economics, Elsevier, vol. 39(2), pages 245-259, June.
  16. Daron Acemoglu & Simon Johnson, 2003. "Unbundling Institutions," NBER Working Papers 9934, National Bureau of Economic Research, Inc.
  17. Sambit Bhattacharyya, 2008. "Unbundled Institutions, Human Capital and Growth," Departmental Working Papers 2008-14, The Australian National University, Arndt-Corden Department of Economics.
  18. Sambit Bhattacharyya & Paul Collier, 2011. "Public Capital in Resource Rich Economies: Is there a Curse?," Economics Series Working Papers WPS/2011-14, University of Oxford, Department of Economics.
  19. Bhattacharyya, Sambit & Hodler, Roland, 2010. "Natural resources, democracy and corruption," European Economic Review, Elsevier, vol. 54(4), pages 608-621, May.
  20. repec:ner:tilbur:urn:nbn:nl:ui:12-3125510 is not listed on IDEAS
  21. Chakraborty, Shankha & Ray, Tridip, 2006. "Bank-based versus market-based financial systems: A growth-theoretic analysis," Journal of Monetary Economics, Elsevier, vol. 53(2), pages 329-350, March.
  22. Ross Levine, 2002. "Bank-Based or Market-Based Financial Systems: Which is Better?," William Davidson Institute Working Papers Series 442, William Davidson Institute at the University of Michigan.
  23. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-63, July.
  24. Beck, T.H.L. & Levine, R., 2005. "Legal institutions and financial development," Other publications TiSEM 428ff33a-eb07-45c7-bee9-4, Tilburg University, School of Economics and Management.
  25. Thorsten Beck & Ross Levine, 2002. "Industry Growth and Capital Allocation: Does Having a Market- or Bank-Based System Matter?," NBER Working Papers 8982, National Bureau of Economic Research, Inc.
  26. Collier, Paul & Hoeffler, Anke, 2009. "Testing the neocon agenda: Democracy in resource-rich societies," European Economic Review, Elsevier, vol. 53(3), pages 293-308, April.
  27. Chakraborty, Shankha & Ray, Tridip, 2007. "The development and structure of financial systems," Journal of Economic Dynamics and Control, Elsevier, vol. 31(9), pages 2920-2956, September.
  28. Hamilton, Kirk & Clemens, Michael, 1999. "Genuine Savings Rates in Developing Countries," World Bank Economic Review, World Bank Group, vol. 13(2), pages 333-56, May.
  29. Demirguc-Kunt, Asli & Feyen, Erik & Levine, Ross, 2011. "The evolving importance of banks and securities markets," Policy Research Working Paper Series 5805, The World Bank.
  30. repec:dgr:kubcen:2011017 is not listed on IDEAS
  31. repec:ner:tilbur:urn:nbn:nl:ui:12-3125518 is not listed on IDEAS
  32. repec:cup:cbooks:9780521117562 is not listed on IDEAS
  33. Hausman, Jerry & Stock, James H. & Yogo, Motohiro, 2005. "Asymptotic properties of the Hahn-Hausman test for weak-instruments," Economics Letters, Elsevier, vol. 89(3), pages 333-342, December.
  34. 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.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:oxf:wpaper:wps/2011-20. 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: (Caroline Wise)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.