Financial Development, Structure and Growth: New Data, Method and Results

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

No E2016/2, Cardiff Economics Working Papers from Cardiff University, Cardiff Business School, Economics Section

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: G0 O16 O4 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2016-03
New Economics Papers: this item is included in nep-fdg
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Citations: View citations in EconPapers (24)

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Related works:
Journal Article: 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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