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Why do financial systems differ? History matters

Author

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  • Cyril Monnet
  • Erwan Quintin

Abstract

We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize financial market lending are more likely to continue doing so in the future, all else equal.
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Suggested Citation

  • Cyril Monnet & Erwan Quintin, 2005. "Why do financial systems differ? History matters," 2005 Meeting Papers 275, Society for Economic Dynamics.
  • Handle: RePEc:red:sed005:275
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    File URL: http://repec.org/sed2005/up.21184.1106326578.pdf
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    References listed on IDEAS

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    1. Lucas, Robert E, Jr & Prescott, Edward C, 1971. "Investment Under Uncertainty," Econometrica, Econometric Society, vol. 39(5), pages 659-681, September.
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    Cited by:

    1. repec:eee:techno:v:66-67:y:2017:i::p:43-56 is not listed on IDEAS
    2. Dong-Hyeon Kim & Ho-Chuan Huang & Shu-Chin Lin & Chih-Chuan Yeh, 2010. "Financial Development On Growth Convergence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(4), pages 493-514, September.
    3. Mikael C. Bergbrant & Delroy M. Hunter & Patrick J. Kelly, 2015. "Product Market Competition, Capital Constraints and Firm Growth," Working Papers w0215, Center for Economic and Financial Research (CEFIR).
    4. Alexis Derviz, 2007. "Cross-Border Risk Transmission by a Multinational Bank," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 1(1), pages 87-111, March.
    5. Franklin Allen & Laura Bartiloro & Xian Gu & Oskar Kowalewksi, 2016. "Does Economic Structure Determine Financial Structure?," Working Papers 2016-ACF-02, IESEG School of Management.
    6. Hans J. Blommestein, 2006. "Visions about the Future of Banking," Chapters in SUERF Studies, SUERF - The European Money and Finance Forum.
    7. Thorsten Koeppl & Cyril Monnet & Erwan Quintin, 2008. "Efficient institutions," Working Papers 08-33, Federal Reserve Bank of Philadelphia.

    More about this item

    JEL classification:

    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative

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