The Evolution of Financial Structure in the G-7 Over 1997–2010

E Davis ()

National Institute Economic Review, 2012, vol. 221, issue 1, R11-R22

Abstract: As background for this special issue of the Review , this article provides an overview of recent developments in financial structure in the major industrial countries using national flow of funds balance sheet data. We focus in particular on changes in the size and composition of the balance sheet for the major sectors — households, companies, general government, foreign and financial as well as banks and institutional investors separately. Two recent subperiods are distinguished, namely the ‘great moderation’ of high growth and low inflation from roughly 1997–2006 and then the crisis period 2007–10. We discern elements of convergence — notably in corporate leverage — but also some continuing contrasts — such as household debt — between market- and bank-dominated financial systems, while highlighting that short-run changes arising from the conjuncture may blur longer-term trends in financial structure. Looking ahead, the data highlight common challenges from public and household debt, albeit to an extent that varies markedly between countries. Bank deleveraging and recapitalisation appear slow, while a subsector including shadow banks continues to grow except in the US. There are contrasts between France and Italy on the one hand and Germany on the other which underline the vulnerability of the former in the ongoing Euro Area crisis.

Keywords: Financial structure; flow of funds; Great Moderation; sub-prime crisis; G-7 (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
http://ner.sagepub.com/content/221/1/R11.abstract (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:niesru:v:221:y:2012:i:1:p:r11-r22

Access Statistics for this article

More articles in National Institute Economic Review from National Institute of Economic and Social Research Contact information at EDIRC.
Bibliographic data for series maintained by SAGE Publications ().