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

Luintel, Kul B. ORCID: https://orcid.org/0000-0001-7430-3926, Khan, Mosahid, Leon-Gonzalez, Roberto and Li, Guangjie ORCID: https://orcid.org/0000-0002-8977-4146 2016. Financial development, structure and growth: new data, method and results. Journal of International Financial Markets, Institutions and Money 43 , pp. 95-112. 10.1016/j.intfin.2016.04.002

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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.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HG Finance
Uncontrolled Keywords:	Financial Structure; Economic Growth; Cointegration; Bayesian Model Averaging; Structural Breaks
Publisher:	Elsevier
ISSN:	1042-4431
Date of First Compliant Deposit:	25 April 2016
Date of Acceptance:	2 April 2016
Last Modified:	06 Nov 2024 04:45
URI:	https://orca.cardiff.ac.uk/id/eprint/89893

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