Financial Structure, Economic Growth and Development

IÉSEG Working Paper Series 2017-ACF-04

70 Pages Posted: 13 Sep 2017

See all articles by Franklin Allen

Franklin Allen

Imperial College London

Xian Gu

Durham University Business School

Oskar Kowalewski

IESEG School of Management; LEM - CNRS 9221

Multiple version iconThere are 2 versions of this paper

Date Written: September 11, 2017

Abstract

Financial intermediaries and markets can alleviate market frictions through producing information and risk sharing in different ways. In practice, the structure of financial systems can be bank-based or market-based, varying across countries. The influence of financial structure on economic growth is dependent on the overall development of the real economy and institutions. The association is also different during crisis periods and non-crisis periods. Market-based systems tend to have an advantage for financially dependent industries in good times but are a disadvantage in bad times. The recent rapid growth of shadow banking benefits economic growth but also poses additional risks to the financial system and real economy.

Keywords: Banks, Markets, Shadow banking, Economic Growth

JEL Classification: G20

Suggested Citation

Allen, Franklin and Gu, Xian and Kowalewski, Oskar, Financial Structure, Economic Growth and Development (September 11, 2017). IÉSEG Working Paper Series 2017-ACF-04, Available at SSRN: https://ssrn.com/abstract=3035298

Franklin Allen

Imperial College London ( email )

South Kensington Campus
Exhibition Road
London, Greater London SW7 2AZ
United Kingdom

Xian Gu

Durham University Business School ( email )

Mill Hill Lane
Durham, DH1 3LB
United Kingdom

Oskar Kowalewski (Contact Author)

IESEG School of Management ( email )

1 Parvis de La Défense
Socle de la Grande Arche
Paris La Défense cedex, 92044
France

HOME PAGE: http://www.ieseg.fr/en/faculty-and-research/professor/?id=1740

LEM - CNRS 9221 ( email )

Lille
France

HOME PAGE: http://lem.cnrs.fr/

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