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Financial System Classification: From Conventional Dichotomy to a More Modern View

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  • Veysov, Alexander

Abstract

This paper is to provide literature review on traditional financial system classification and offer and alternative classification of financial systems. Conventional wisdom holds that there are basically 2 types of financial systems – bank-based and market-based. But modern research points to the fact that such opinion may be quite biased. We consider several functions of financial system (not only financing, but corporate governance and information dissemination) and construct a database of financial metrics and institutional variables is order to conduct cluster-analysis. Our findings include: dichotomy does not hold; institutional environment is a key driver of financial system development; commodity exporters have inadequately low institutional development level.

Suggested Citation

  • Veysov, Alexander, 2012. "Financial System Classification: From Conventional Dichotomy to a More Modern View," MPRA Paper 40613, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:40613
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    File URL: https://mpra.ub.uni-muenchen.de/40613/1/MPRA_paper_40613.pdf
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    References listed on IDEAS

    as
    1. Djankov, Simeon & McLiesh, Caralee & Shleifer, Andrei, 2007. "Private credit in 129 countries," Journal of Financial Economics, Elsevier, vol. 84(2), pages 299-329, May.
    2. Bottazzi, Laura, 2009. "The role of venture capital in alleviating financial constraints of innovative firms," EIB Papers 9/2009, European Investment Bank, Economics Department.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    financial system; classification; cluster analysis; alternative classification;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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