NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Bank-Based or Market-Based Financial Systems: Which is Better?

Ross Levine

NBER Working Paper No. 9138
Issued in September 2002
NBER Program(s):Corporate Finance, International Finance and Macroeconomics

For over a century, economists and policy makers have debated the relative merits of bank-based versus market-based financial systems. Recent research, however, argues that classifying countries as bank-based or market is not a very fruitful way to distinguish financial systems. This paper represents the first broad, cross-country examination of which view of financial structure is more consistent with the data. The results indicate that although overall financial development is robustly linked with economic growth, there is no support for either the bank-based or market-based view.

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Document Object Identifier (DOI): 10.3386/w9138

Published: Levine, Ross. "Bank-based Or Market-based Financial Systems: Which Is Better?," Journal of Financial Intermediation, 2002, v11(4,Oct), 398-428. citation courtesy of

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