Financial development, structure and growth: New data, method and results

Kul Luintel (), Mosahid Khan, Roberto Leon-Gonzalez and Guangjie Li

Journal of International Financial Markets, Institutions and Money, 2016, vol. 43, issue C, 95-112

Abstract: 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.

Keywords: Financial structure; Economic growth; Cointegration; Bayesian model averaging; Structural breaks (search for similar items in EconPapers)
JEL-codes: C5 G1 G2 O1 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (24)

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Related works:
Working Paper: Financial Development, Structure and Growth: New Data, Method and Results (2016)
Working Paper: Financial Development, Structure and Growth: New Data, Method and Results (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:intfin:v:43:y:2016:i:c:p:95-112

DOI: 10.1016/j.intfin.2016.04.002

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