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Convergence of financial systems: Towards an evolutionary perspective

  • Werner Hölzl

    ()

    (Vienna University of Economics & B.A.)

This paper provides an evolutionary perspective on financial systems based on complex systems theory. This perspective is used to organize the discussion about the convergence and non-convergence of financial systems. In recent years the discussion about the relative merits and the efficiency of market- and bank-based financial systems is subject to considerable academic and policy debate throughout the world. Bank- and market-based systems are found to give rise to different economic and corporate dynamics. Based on a notion of financial systems as configuration of complementary elements, it is suggested that the convergence of financial systems is best conceptualized as path dependent process of institutional change. This is illustrated with special reference to the recent developments of convergence of financial systems in Europe. The implication of the evolutionary perspective on financial systems is that neither theories using a simple evolutionary argument of survival of the fittest nor theories related to a institutional ossification perspective can provide much guidance for analyzing the transformations of financial systems. A multilevel institutional analysis which takes the interdependencies between national and firm-level institutions explicitly into account is required.

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Paper provided by Vienna University of Economics and Business Research Group: Growth and Employment in Europe: Sustainability and Competitiveness in its series Working Papers with number geewp31.

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Date of creation: Aug 2003
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Handle: RePEc:wiw:wiwgee:geewp31
Note: PDF Document
Contact details of provider: Postal: Welthandelsplatz 1, 1020 Vienna, Austria
Web page: http://www.wu.ac.at/economics/en

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