Departmental Bulletin Paper Financial Development, Structure and Growth : New Data, Method and Results

LUINTEL, Kul B  ,  KHAN, Mosahid  ,  LEON-GONZALEZ, Roberto  ,  LI, Guangjie

15-272016-03 , GRIPS Policy Research Center
Description
The existing weight of evidence suggests that financial structure (the classification of a financial system as bank-based versus market-based) is irrelevant for economic growth. This contradicts the common belief that the institutional structure of a financial system matters. We re-examine this issue using a novel dataset covering 69 countries over 1989-2011 in a Bayesian framework. Our results are conformable to the belief - a market-based system is relevant - with sizable economic effects for the high-income but not for the middle-and-low-income countries. Our findings provide a counterexample to the weight of evidence. We also identify a regime shift in 2008.
JEL Classification Codes: G0, O4, O16
http://www.grips.ac.jp/list/jp/facultyinfo/leon_gonzalez_roberto/
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