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Financial structure, financial development and banking fragility: International evidence

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  • Ruiz-Porras, Antonio

Abstract

We study the effects of financial structure and financial development on banking fragility. We develop our study by using fixed-effects panel-data regressions and by controlling the effects of certain banking indicators. We use individual and principal-components indicators of the activity, size and efficiency of intermediaries and markets. The indicators include data for 211 countries between 1990 and 2003. Our main findings suggest that banking stability is enhanced in market-based financial systems. Financial development reduces it. However this fragility-enhancing effect can be unveiled only when we account for financial structure. Thus, financial structure and development jointly matter to assess banking fragility.

Suggested Citation

  • Ruiz-Porras, Antonio, 2008. "Financial structure, financial development and banking fragility: International evidence," MPRA Paper 12124, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:12124
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    File URL: https://mpra.ub.uni-muenchen.de/12124/1/MPRA_paper_12124.pdf
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    References listed on IDEAS

    as
    1. Loayza, Norman V. & Ranciere, Romain, 2006. "Financial Development, Financial Fragility, and Growth," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(4), pages 1051-1076, June.
    2. Goodhart, Charles & Illing, Gerhard (ed.), 2002. "Financial Crises, Contagion, and the Lender of Last Resort: A Reader," OUP Catalogue, Oxford University Press, number 9780199247219.
    3. Felton, Andrew & Reinhart, Carmen M. (ed.), 2009. "The First Global Financial Crisis of the 21st Century Part II: June–December, 2008," Vox eBooks, Centre for Economic Policy Research, number p199.
    4. Scholtens, Bert & van Wensveen, Dick, 2000. "A critique on the theory of financial intermediation," Journal of Banking & Finance, Elsevier, vol. 24(8), pages 1243-1251, August.
    5. Antonio Ruiz-Porras, 2008. "Banking Competition and Financial Fragility: Evidence from Panel-Data," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 23(1), pages 49-87.
    6. Franklin Allen, 2001. "Financial Structure and Financial Crisis," International Review of Finance, International Review of Finance Ltd., vol. 2(1&2), pages 1-19.
    7. Asli Demirgüç-Kunt & Enrica Detragiache, 2005. "Cross-Country Empirical Studies of Systemic Bank Distress: A Survey," National Institute Economic Review, National Institute of Economic and Social Research, vol. 192(1), pages 68-83, April.
    8. Demirguc-Kunt, Asli & Huizinga, Harry, 2000. "Financial structure and bank profitability," Policy Research Working Paper Series 2430, The World Bank.
    9. Ruiz-Porras, Antonio, 2006. "Financial systems and banking crises: An assessment," MPRA Paper 168, University Library of Munich, Germany.
    10. Corsetti, Giancarlo & Devereux, Michael P. & Hassler, John & Jenkinson, Tim & Saint-Paul, Gilles & Sinn, Hans-Werner & Sturm, Jan-Egbert & Vives, Xavier, 2009. "The financial crisis," Munich Reprints in Economics 20099, University of Munich, Department of Economics.
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    Cited by:

    1. International Monetary Fund, 2014. "Namibia; Selected Issues," IMF Staff Country Reports 14/41, International Monetary Fund.

    More about this item

    Keywords

    Banks; fragility; financial structure; financial development;

    JEL classification:

    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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