Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144995
Authors: 
Amissah, Emmanuel
Bougheas, Spiros
Defever, Fabrice
Falvey, Rod
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5960
Abstract: 
Countries differ on the extent to which their financial system relies on banks or on the financial market. We offer a model featuring a possible two way relationship between countries’ financial system architecture and their comparative advantage. Countries specialising in bank dependent sectors favour the development of the banking sector. Simultaneously, countries with more efficient capital markets develop comparative advantage in sectors with strong dependence on market finance. To empirically investigate our model’s predictions, we construct a measure of sector bank dependence and establish a strong relationship between countries’ comparative advantage and their financial system architecture.
Subjects: 
financial systems
trade patterns
banks
direct finance
JEL: 
F10
G20
G21
Document Type: 
Working Paper

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