Financial Structures and Economic Outcomes: An Empirical Analysis

May 22, 2013

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Format: Chicago

Tom Gole, and Tao Sun. Financial Structures and Economic Outcomes: An Empirical Analysis, (USA: International Monetary Fund, 2013) accessed September 20, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the potential relationships between financial structures and economic outcomes. The empirical results that withstand a battery of methods suggest that some financial intermediation structures are likely to be more closely related to positive economic outcomes than others. For instance, protective financial buffers within institutions have been associated with better economic performance, and a domestic financial system that is dominated by some types of nontraditional bank intermediation or that has a high proportion of foreign banks has in some cases been associated with adverse economic outcomes, especially during the financial crisis. The results also suggest that there may be trade-offs between beneficial effects on growth and stability of some financial structures. For example, the positive association of financial buffers with growth can diminish above a certain, relatively high, threshold—a too-safe system may limit the available funds for credit and hence growth.

Subject: Banking, Banking crises, Commercial banks, Financial crises, Financial institutions, Financial markets, Financial sector development, Foreign banks, Income inequality, National accounts

Keywords: Bank asset concentration, Banking crises, Banking sector concentration, Banking system assets, Commercial banks, Earning assets, Economic outcomes, Economy, Economy to external shocks, Finance-economic growth relationship, Financial crisis, Financial market imperfection, Financial sector development, Financial structures, Financial system, Fixed-effects panel estimation, Foreign banks, Gini coefficient, Global, Income inequality, Interbank asset, Intermediation Index, Liquidity requirements study, WP

Publication Details

Pages:

29
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2013/121
Stock No:

WPIEA2013121
ISBN:

9781484335420
ISSN:

1018-5941

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