Why Do Financial Systems Differ? History Matters

26 Pages Posted: 29 Jul 2005

See all articles by Cyril Monnet

Cyril Monnet

Federal Reserve Bank of Philadelphia

Erwan Quintin

Federal Reserve Bank of Dallas

Multiple version iconThere are 2 versions of this paper

Date Written: December 2004

Abstract

We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize financial market lending are more likely to continue doing so in the future, all else equal.

Keywords: Financial Systems, Financial Markets, Financial Institutions, Banks, Convergence

JEL Classification: L16, G10, G20, N20

Suggested Citation

Monnet, Cyril and Quintin, Erwan, Why Do Financial Systems Differ? History Matters (December 2004). Available at SSRN: https://ssrn.com/abstract=676427 or http://dx.doi.org/10.2139/ssrn.676427

Cyril Monnet (Contact Author)

Federal Reserve Bank of Philadelphia ( email )

Ten Independence Mall
Philadelphia, PA 19106-1574
United States

Erwan Quintin

Federal Reserve Bank of Dallas ( email )

PO Box 655906
Dallas, TX 75265-5906
United States

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