Bank-Based and Market-Based Financial Systems: Cross-Country Comparisons

ArXiv ID: ssrn-569255 “View on arXiv”

Authors: Unknown

Abstract

Financial systems tend to be more market-based in higher income countries, where stock markets also become more active and efficient than banks.

Financial sy

Keywords: Market-Based Finance, Bank-Based Finance, Financial Structure, Economic Development, Macro

Complexity vs Empirical Score

• Math Complexity: 1.5/10
• Empirical Rigor: 8.0/10
• Quadrant: Street Traders
• Why: The paper relies on statistical analysis of cross-country data with simple correlations and regressions, but its mathematical formalism is minimal and descriptive. It is highly data-intensive, constructing new indices for 150 countries and testing specific policy determinants, making it ready for empirical validation.

  flowchart TD
    A["Research Goal: Compare Bank vs. Market Finance across Countries"] --> B["Methodology: Cross-Country Analysis"]
    B --> C["Data: Macro Variables & Financial Structure Indicators"]
    C --> D["Computation: Panel Regressions & Clustering"]
    D --> E{"Key Finding: Wealthier nations shift<br>from bank-dominant to market-dominant systems"}
    E --> F["Outcome: Market efficiency rises<br>with economic development"]