 Political origins of financial structureJournal of Comparative Economics, 2013, vol. 41, issue 4, 979-994 Abstract: There is growing policy interest in the role of financial structure in promoting development. However, very little is known about how different financial structures emerge and evolve. In this paper we empirically assess the political origins of financial structure. Using difference–in difference estimation and annual data, we study the effects of democratization on financial structure in a sample of 96 countries covering the period 1970–2005. Democratization here corresponds to the event of becoming a democracy. We find that democratization leads to a more market-based financial system. Democratic change could also be incremental rather than a one off. To identify the effect of incremental democratic change on financial structure we estimate a separate model and find that democracy matters. We also find that countries with substantial democratic capital are more likely to have a market-based financial structure. Our main results are robust to a variety of controls, Arellano–Bond GMM estimation, alternative measures of democracy and financial structure, and across different samples. Keywords: Democratization; Democracy; Financial structure (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jcecon:v:41:y:2013:i:4:p:979-994 DOI: 10.1016/j.jce.2013.05.009 Access Statistics for this article Journal of Comparative Economics is currently edited by D. Berkowitz and G. Roland More articles in Journal of Comparative Economics from Elsevier |
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