Financial Structure and Economic Growth: A Cross-Country Comparison of Banks, Markets, and Development

444 Pages·2001·9.246 MB·English

by  Asli Demirguc-Kunt, Ross Levine

Financial Structure and
Economic Growth
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Financial Structure and
Economic Growth
A Cross-Country
Comparison of Banks,
Markets, and Development
Edited by
Aslı Demirgu¨c¸-Kunt and
Ross Levine
The MIT Press
Cambridge, Massachusetts
London, England
(2001MassachusettsInstituteofTechnology
All rights reserved. No part of this book may be reproduced in any form by any
electronic or mechanical means (including photocopying, recording, or information
storageandretrieval)withoutpermissioninwritingfromthepublisher.
ThisbookwassetinPalatinobyAscoTypesetters,HongKong,on3B2.
PrintedandboundintheUnitedStatesofAmerica.
LibraryofCongressCataloging-in-PublicationData
Financialstructureandeconomicgrowth:across-countrycomparisonofbanks,
markets,anddevelopment/editedbyAslıDemirgu¨c¸-KuntandRossLevine.
p. cm.
Includesbibliographicalreferencesandindex.
ISBN0-262-04198-7(hc.:alk.paper)
1.Banksandbanking—Casestudies. 2.Financialinstitutions—Casestudies.
3.Stockexchanges—Casestudies. 4.Economicdevelopment—Casestudies.
I.Demirgu¨c¸-Kunt,Aslı,1961– II.Levine,Ross.
HG1601.F48 2001
332.1—dc21 2001044154
Contents
Acknowledgments vii
I Introduction 1
1 Financial Structure and Economic Growth: Perspectives and
Lessons 3
Aslı Demirgu¨c¸-Kunt and Ross Levine
II Measurement and Determinants of Financial Structure 15
2 The Financial Structure Database 17
Thorsten Beck, Aslı Demirgu¨c¸-Kunt, and Ross Levine
3 Bank-Based and Market-Based Financial Systems:
Cross-Country Comparisons 81
Aslı Demirgu¨c¸-Kunt and Ross Levine
III Financial Structure and Economic Growth across
Countries 141
4 Does Financial Structure Matter for Economic Growth? A
Corporate Finance Perspective 143
Rene´ Stulz
5 Financial Structure and Economic Development: Firm, Industry,
and Country Evidence 189
Thorsten Beck, Aslı Demirgu¨c¸-Kunt, Ross Levine, and Vojislav
Maksimovic
vi Contents
6 Financial Structure and Bank Profitability 243
Aslı Demirgu¨c¸-Kunt and Harry Huizinga
7 International Evidence on Aggregate Corporate Financing
Decisions 263
Ian Domowitz, Jack Glen, and Ananth Madhavan
IV Financial Structure and Economic Performance: Country
Studies 297
8 Financial Structure in Chile: Macroeconomic Developments and
Microeconomic Effects 299
Francisco Gallego and Norman Loayza
9 Firms’ Financing Choices in Bank-Based and Market-Based
Economies 347
Sergio Schmukler and Esteban Vesperoni
10 Corporate Groups, Financial Liberalization, and Growth: The
Case of Indonesia 377
Andy Chui, Sheridan Titman, and K. C. John Wei
Index 411
Acknowledgments
Many people made this book possible. We are especially grateful to
GerardCaprioforhisintellectualleadershipand support. Wewould
like to thank Joe Stiglitz and Paul Collier for their guidance at key
stages of the research.
Over the course of two years, Thorsten Beck went from construct-
ing the data sets and commenting on our papers to being a valued
coauthor. Many colleagues helped by discussing and by providing
comments: Franklin Allen, John Boyd, Chun Chang, Stijn Claessens,
Augusto De la Torre, Cevdet Denizer, Bulent Gultekin, James
Hanson, Patrick Honohan, Enrico Perotti, Guillermo Perry, Raghu
Rajan, Lemma Senbet, Andrew Sheng, Mary Shirley, Dimitri Vittas,
and John Williamson. Participants at the World Bank Conference on
Financial Structures and Economic Development, February 10–11,
2000, provided valuable input. Many thanks are due to the authors
for their contributions to this volume.
Bo Wang and Anqing Shi provided valuable research assistance.
Paramjit K. Gill read many versions of the manuscript. We are also
gratefultoPollyMeansandKariLabriewhowentoutoftheirwayto
help produce the manuscript.
We would also like to thank our families, who lovingly let us
substitute research for leisure during this project.
I
Introduction
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