Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/174115
Authors: 
Luintel, Kul Bahadur
Khan, Mosahid
Leon-Gonzalez, Roberto
Li, Guang Jie
Year of Publication: 
2016
Series/Report no.: 
Cardiff Economics Working Papers E2016/2
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.
Subjects: 
Financial Structure
Economic Growth
Cointegration
Bayesian Model Averaging
Structural Breaks
JEL: 
G0
O4
O16
Document Type: 
Working Paper
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