The Evolving Importance of Banks and Securities Markets

By Asli Demirgüç-Kunt, E. Feyen, Ross Levine. 2011

340 citations recorded by the source corpus.

This paper examines the evolving importance of banks and securities markets during the process of economic development. As economies develop, they increase their demand for the services provided by securities markets relative to those provided by banks, such that securities markets become increasingly important for future economic development. Some exploratory evidence further suggests that deviations of a countrys actual financial structure -- the mixture of banks and markets operating in an economy -- from the estimated optimal structure are associated with lower levels of economic activity.

Subfields: Accounting, Finance

View Paper: https://www.semanticscholar.org/paper/8e8fd0b34dfb82e8e4ed1d7d90937f4a3e999187

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Citations in the corpus

Too much finance? (2015, positive): “While Demirgüç-Kunt et al. (2013) make no claim concerning causality, their findings are consistent with theories suggesting that the services provided by banks become less important when economies become richer.”
Financial Development and Industrial Pollution (2018, positive): “Data come from Duygan-Bump et al. (2015). This variable controls for the possibility that the financial structure operates through the industry’s natural reliance on external financing, and not through its propensity to pollute.”
Does mandatory IFRS adoption facilitate debt financing? (2015, background): “control for the development of the capital market and the banking sector, respectively (Demirguc-Kunt et al. 2012); and (e) Performance Pricing, Term Loan, and Revolver indicators as additional controls for the”
Financial Structure and Growth (2014, background): “In line with Allen and Gale (2000) and Demirgüç-Kunt et al (2011), we also find that banks provide services which differ from those offered by financial markets and that such services prove to be particularly beneficial for less developed countries (as proxied by real income per capita).”
Financialization and Economic Development: A Debate on the Social Efficiency of Modern Finance (2018, background): “In short, there are reasons to believe that a bank-based financial system is inferior to an alternative, market-based financial system (Demirgüc-Kunt et al., 2012; Levine, 2005; see Hardie and Howarth, 2013, for a critique).”