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Does economic structure determine financial structure?

Allen, Franklin; Bartiloro, Laura; Gu, Xian; Kowalewski, Oskar

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Authors

Franklin Allen

Laura Bartiloro

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Dr Xian Gu xian.gu@durham.ac.uk
Associate Professor in Finance

Oskar Kowalewski



Abstract

In this paper, we examine the relationship between the structure of the real economy and a country's financial system. We consider whether the development of the real economic structure can predict the direction of evolution of a country's financial structure. Using data for 108 countries, we find a significant relationship between real economic structure and financial structure. Next, we exploit shocks to the economies in India, Finland and Sweden, and South Korea and show that changes in the economic structure of a country influence the evolution of its financial system. This suggests that financial institutions and capital markets change in response to the structure of industries.

Citation

Allen, F., Bartiloro, L., Gu, X., & Kowalewski, O. (2018). Does economic structure determine financial structure?. Journal of International Economics, 114, 389-409. https://doi.org/10.1016/j.jinteco.2018.08.004

Journal Article Type Article
Acceptance Date Aug 11, 2018
Online Publication Date Aug 16, 2018
Publication Date 2018-09
Deposit Date Jul 30, 2020
Publicly Available Date Mar 28, 2024
Journal Journal of International Economics
Print ISSN 0022-1996
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 114
Pages 389-409
DOI https://doi.org/10.1016/j.jinteco.2018.08.004
Public URL https://durham-repository.worktribe.com/output/1259429

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