The Structure of Banking Systems in Developed and Transition Economies

34 Pages Posted: 10 Sep 2000  

Mark Levonian

Government of the United States of America - Office of the Comptroller of the Currency (OCC)

Dwight M. Jaffee

University of California, Berkeley - Finance Group; National Bureau of Economic Research (NBER)

Date Written: January 20, 2000

Abstract

In this paper, we first use cross-section regressions to determine the most important proximate causes of the observed structure of banking system structure for 26 developed OECD countries. Banking system structure is measured by four variables: bank assets, the number of banks, bank branches, and bank employees. We then apply the estimated regressions to 23 developing transition economies, in order to obtain benchmarks for the efficient structure of the banking systems in these countries. A comparison of the actual and benchmark measures of banking structure in these economies provides a basis for evaluating the state of development of their banking systems. In particular, we compute measures of "banking system convergence" - how closely the banking structure of the transition economies approach the OECD benchmark. In contrast to the economic growth literature, which takes the banking system structure as given, our focus is on the factors that determine banking system structure. Our goal is to provide objective and replicable multidimensional measures of banking system development for the transition economies, which can then be applied to questions of economic growth in these countries.

JEL Classification: G21, L8, O16, P34

Suggested Citation

Levonian, Mark and Jaffee, Dwight M., The Structure of Banking Systems in Developed and Transition Economies (January 20, 2000). EFMA 2000 Athens Meetings. Available at SSRN: https://ssrn.com/abstract=239350 or http://dx.doi.org/10.2139/ssrn.239350

Mark Levonian

Government of the United States of America - Office of the Comptroller of the Currency (OCC) ( email )

400 7th Street SW
Washington, DC 20219
United States
202-874-5230 (Phone)

Dwight M. Jaffee (Contact Author)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

University of California, Berkeley - Finance Group ( email )

Haas School of Business
545 Student Services Building
Berkeley, CA 94720
United States

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