How Important Historically Were Financial Systems for Growth in the U.K., U.S., Germany, and Japan?

55 Pages Posted: 2 Nov 2010

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Forrest Capie

Bank of England

Caroline Fohlin

Emory University; Centre for Economic Policy Research (CEPR)

Hideaki Miyajima

Waseda University - Graduate School of Commerce; Research Institute of Economy, Trade and Industry (RIETI)

Richard Sylla

New York University - Stern School of Business, Department of Economics

Yishay Yafeh

Hebrew University of Jerusalem - Jerusalem School of Business Administration; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Geoffrey Wood

Cass Business School

Date Written: October 25, 2010

Abstract

The sources of finance for industrial development include (i) banks, (ii) securities markets, (iii) internal finance, (iv) alternative sources of finance such as angel finance, trade credit, families, and friends, and (v) governments. All four countries had sophisticated financial systems and all four grew successfully. The fact that they had different financial systems suggests that if there is an optimal financial structure for a country it does not lead to a significantly greater level of growth than other possible structures. The experiences of the four countries considered suggest that a variety of financial structures can lead to high rates of growth in real per capita GDP.

Suggested Citation

Allen, Franklin and Capie, Forrest and Fohlin, Caroline and Miyajima, Hideaki and Sylla, Richard and Yafeh, Yishay and Wood, Geoffrey E., How Important Historically Were Financial Systems for Growth in the U.K., U.S., Germany, and Japan? (October 25, 2010). Available at SSRN: https://ssrn.com/abstract=1701274 or http://dx.doi.org/10.2139/ssrn.1701274

Franklin Allen (Contact Author)

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Forrest Capie

Bank of England ( email )

Threadneedle Street
London, EC2R 8AH
United Kingdom
020 7601 3680 (Phone)

Caroline Fohlin

Emory University ( email )

Dept. of Economics
Atlanta, GA Georgia 30322
United States
4047276363 (Phone)

HOME PAGE: http://https://scholar.google.com/citations?user=Ma08bxEAAAAJ&hl=en

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Hideaki Miyajima

Waseda University - Graduate School of Commerce ( email )

1-6-1, Nishi-Waseda
Shinjuku-ku, Tokyo 169-8050
Japan
(81 3) 5286 2019 (Phone)
(81 3) 3203 7067 (Fax)

Research Institute of Economy, Trade and Industry (RIETI) ( email )

1-3-1 Kasumigaseki
Chiyoda-ku
Tokyo 100-8901
Japan

Richard Sylla

New York University - Stern School of Business, Department of Economics ( email )

269 Mercer Street
New York, NY 10003
United States
212-998-0869 (Phone)

Yishay Yafeh

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem 91905
Israel
+972 2 588 3081 (Phone)
+972 2 588 1341 (Fax)

HOME PAGE: http://bschool.huji.ac.il/facultye/yafeh/

European Corporate Governance Institute (ECGI)

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

HOME PAGE: http://www.ecgi.org

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Geoffrey E. Wood

Cass Business School ( email )

London, EC2Y 8HB
Great Britain
+44 0 20 7040 8740 (Phone)
+44 0 20 7040 8881 (Fax)

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