Bank-Based or Market-Based Financial Systems: Which is Better?

45 Pages Posted: 27 Apr 2002

See all articles by Ross Levine

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2002

Abstract

For over a century, economists and policy makers have debated the relative merits of bank-based versus market-based financial systems. Recent research, however, argues that classifying countries as bank-based or market is not a very fruitful way to distinguish financial systems. This paper represents the first broad, cross-country examination of which view of financial structure is more consistent with the data. The results indicate that although overall financial development is robustly linked with economic growth, there is no support for either the bank-based or market-based view.

Keywords: Banks, Stock Markets, Law, Economic Growth

JEL Classification: G0, K2, O4

Suggested Citation

Levine, Ross Eric, Bank-Based or Market-Based Financial Systems: Which is Better? (February 2002). William Davidson Institute Working Paper No. 442. Available at SSRN: https://ssrn.com/abstract=307096 or http://dx.doi.org/10.2139/ssrn.307096

Ross Eric Levine (Contact Author)

University of California, Berkeley - Haas School of Business ( email )

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Berkeley, CA 94720
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National Bureau of Economic Research (NBER)

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