Comparing Financial Systems: A structural Analysis

Sylvain Champonnois

No 520, 2006 Meeting Papers from Society for Economic Dynamics

Abstract: This paper investigates whether the financial markets are relatively more efficient than banks in the UK than in continental Europe. The UK channels a larger fraction of the financial flow to the firms through financial markets than continental Europe but this is explained by larger firms in the UK, not relatively more efficient markets. This conclusion is drawn from an industry-level structural estimation using data on the UK, France, Germany and Italy. The structural model is based on a novel theory of capital allocation and investment in which the decisions of heterogenous firms across financing instruments are aggregated in closed-form

Keywords: Financial structure; bank finance; market finance; heterogenous firms; structural estimation (search for similar items in EconPapers)
JEL-codes: C51 E44 G31 (search for similar items in EconPapers)
Date: 2006
New Economics Papers: this item is included in nep-ban, nep-eec, nep-fmk and nep-mac
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Citations: View citations in EconPapers (4)

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