IDEAS home Printed from https://ideas.repec.org/a/cup/jinsec/v2y2006i01p67-90_00.html
   My bibliography  Save this article

Convergence of financial systems: towards an evolutionary perspective

Author

Listed:
  • HÖLZL, WERNER

Abstract

This paper provides an evolutionary perspective on financial systems based on complex systems theory. This perspective is used to organize the discussion about the convergence and non-convergence of financial systems. Based on a notion of financial systems as configuration of complementary elements, it is suggested that the convergence of financial systems is best conceptualized as a path-dependent process of institutional change and innovation. The implication of the evolutionary perspective on the dynamics of financial systems is that neither convergence theories using a simple evolutionary argument of survival of the fittest nor divergence theories related to strong complementarities can provide much guidance for analyzing institutional transformations of financial systems.

Suggested Citation

  • Hölzl, Werner, 2006. "Convergence of financial systems: towards an evolutionary perspective," Journal of Institutional Economics, Cambridge University Press, vol. 2(1), pages 67-90, April.
    • Handle: RePEc:cup:jinsec:v:2:y:2006:i:01:p:67-90_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1744137405000214/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. repec:bla:manchs:v:67:y:1999:i:3:p:325-45 is not listed on IDEAS
    2. Black, Bernard S. & Gilson, Ronald J., 1998. "Venture capital and the structure of capital markets: banks versus stock markets," Journal of Financial Economics, Elsevier, vol. 47(3), pages 243-277, March.
    3. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    4. Mayer, Colin, 1988. "New issues in corporate finance," European Economic Review, Elsevier, vol. 32(5), pages 1167-1183, June.
    5. Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
    6. Carlin, Wendy & Mayer, Colin, 2003. "Finance, investment, and growth," Journal of Financial Economics, Elsevier, vol. 69(1), pages 191-226, July.
    7. La Porta, Rafael & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1997. "Legal Determinants of External Finance," Journal of Finance, American Finance Association, vol. 52(3), pages 1131-1150, July.
    8. O'Sullivan, Mary, 2000. "The Innovative Enterprise and Corporate Governance," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 24(4), pages 393-416, July.
    9. Allen, Franklin & Gale, Douglas, 1997. "Financial Markets, Intermediaries, and Intertemporal Smoothing," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 523-546, June.
    10. Steven M. Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988. "Financing Constraints and Corporate Investment," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(1), pages 141-206.
    11. Koen Frenken & Luigi Marengo & Marco Valente, 1999. "Interdependencies, nearly-decomposability and adaption," CEEL Working Papers 9903, Cognitive and Experimental Economics Laboratory, Department of Economics, University of Trento, Italia.
    12. Raghuram G. Rajan & Luigi Zingales, 1998. "Which Capitalism? Lessons Form The East Asian Crisis," Journal of Applied Corporate Finance, Morgan Stanley, vol. 11(3), pages 40-48, September.
    13. Ross Levine, 1997. "Financial Development and Economic Growth: Views and Agenda," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 688-726, June.
    14. Malcolm Edey & Ketil Hviding, 1995. "An Assessment of Financial Reform in OECD Countries," OECD Economics Department Working Papers 154, OECD Publishing.
    15. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    16. Takeo Hoshi & Anil Kashyap & David Scharfstein, 1991. "Corporate Structure, Liquidity, and Investment: Evidence from Japanese Industrial Groups," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(1), pages 33-60.
    17. Gompers, Paul A, 1995. "Optimal Investment, Monitoring, and the Staging of Venture Capital," Journal of Finance, American Finance Association, vol. 50(5), pages 1461-1489, December.
    18. Jackie Krafft & Jacques-Laurent Ravix, 2005. "The governance of innovative firms: An evolutionary perspective," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(3), pages 125-147.
    19. Rajan, Raghuram G & Zingales, Luigi, 1995. "What Do We Know about Capital Structure? Some Evidence from International Data," Journal of Finance, American Finance Association, vol. 50(5), pages 1421-1460, December.
    20. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    21. Carlota Perez, 2002. "Technological Revolutions and Financial Capital," Books, Edward Elgar Publishing, number 2640.
    22. Robert N. McCauley & Steven A. Zimmer, 1989. "Explaining international differences in the cost of capital," Quarterly Review, Federal Reserve Bank of New York, vol. 14(Sum), pages 7-28.
    23. David, Paul A., 1994. "Why are institutions the 'carriers of history'?: Path dependence and the evolution of conventions, organizations and institutions," Structural Change and Economic Dynamics, Elsevier, vol. 5(2), pages 205-220, December.
    24. Raghuram G. Rajan & Luigi Zingales, 1998. "The Governance of the New Enterprise," CRSP working papers 487, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    25. Colin Mayer, 2001. "Financing the New Economy: Financial Institutions and Corporate Governance," WIDER Working Paper Series DP2001-04, World Institute for Development Economic Research (UNU-WIDER).
    26. Pelikan, Pavel, 2003. "Bringing Institutions Into Evolutionary Economics: Another View with Links to Changes in Physical and Social Technologies," Ratio Working Papers 24, The Ratio Institute.
    27. Colin Mayer, 1998. "Financial Systems and Corporate Governance: A Review of the International Evidence," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 154(1), pages 144-144, March.
    28. Mayer, Colin, 2002. "Financing the New Economy: financial institutions and corporate governance," Information Economics and Policy, Elsevier, vol. 14(2), pages 311-326, June.
    29. Pavel Pelikan, 2003. "Bringing institutions into evolutionary economics: another view with links to changes in physical and social technologies," Journal of Evolutionary Economics, Springer, vol. 13(3), pages 237-258, August.
    30. Corbett, Jenny & Jenkinson, Tim, 1997. "How Is Investment Financed? A Study of Germany, Japan, the United Kingdom and the United States," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(0), pages 69-93, Supplemen.
    31. Petersen, Mitchell A & Rajan, Raghuram G, 1994. "The Benefits of Lending Relationships: Evidence from Small Business Data," Journal of Finance, American Finance Association, vol. 49(1), pages 3-37, March.
    32. Mayer, Colin, 2002. "Financing the New Economy: financial institutions and corporate governance," Information Economics and Policy, Elsevier, vol. 14(2), pages 311-326, June.
    33. David Cobham & Jean‐Marin Serre, 2000. "A characterization of the French financial system," Manchester School, University of Manchester, vol. 68(1), pages 44-67, January.
    34. Oona Hathaway, "undated". "Path Dependence in the Law: The Course and Pattern of Legal Change in a Common Law System," Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy Working Paper Series yale_lepp-1002, Yale Law School John M. Olin Center for Studies in Law, Economics, and Public Policy.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bruno, Giuseppe & De Bonis, Riccardo & Silvestrini, Andrea, 2012. "Do financial systems converge? New evidence from financial assets in OECD countries," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 141-155.
    2. Chang, Tsangyao & Chen, Wen-Yi & Gupta, Rangan & Nguyen, Duc Khuong, 2015. "Are stock prices related to the political uncertainty index in OECD countries? Evidence from the bootstrap panel causality test," Economic Systems, Elsevier, vol. 39(2), pages 288-300.
    3. Khraisha, Tamer, 2020. "Complex economic problems and fitness landscapes: Assessment and methodological perspectives," Structural Change and Economic Dynamics, Elsevier, vol. 52(C), pages 390-407.
    4. Simplice A. Asongu, 2014. "African financial development dynamics: big time convergence," African Journal of Economic and Management Studies, Emerald Group Publishing Limited, vol. 5(2), pages 160-194, July.
    5. James Weber & David Wasieleski, 2013. "Corporate Ethics and Compliance Programs: A Report, Analysis and Critique," Journal of Business Ethics, Springer, vol. 112(4), pages 609-626, February.
    6. Hiroshi Nishi, 2019. "An empirical contribution to Minsky’s financial fragility: evidence from non-financial sectors in Japan," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 43(3), pages 585-622.
    7. Fabienne Bonetto & Srđan Redžepagić & Anna Tykhonenko, 2009. "Balkan Countries: Catching Up and their Integration in the European Financial System," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 56(4), pages 475-489, December.
    8. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    9. Nedelchev, Miroslav, 2012. "Корпоративно Управление На Финансови Посредници: Конвергенция И Дивергенция [Corporate Governance Of Financial Intermediaries: Convergence And Divergence]," MPRA Paper 52268, University Library of Munich, Germany.
    10. Simplice A. Asongu, 2013. "African Stock Market Performance Dynamics: A Multidimensional Convergence Assessment," Journal of African Business, Taylor & Francis Journals, vol. 14(3), pages 186-201, December.
    11. Jackie Krafft & Yiping Qu & Francesco Quatraro & Jacques-Laurent Ravix, 2014. "Corporate governance, value and performance of firms: new empirical results on convergence from a large international database," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 23(2), pages 361-397.
    12. Dilli, Selin & Elert, Niklas, 2016. "The Diversity of Entrepreneurial Regimes in Europe," Working Paper Series 1118, Research Institute of Industrial Economics.
    13. repec:hal:wpaper:hal-00786664 is not listed on IDEAS
    14. Nedelchev, Miroslav, 2012. "Corporate governance of financial intermediaries: convergence and divergence," MPRA Paper 53939, University Library of Munich, Germany.
    15. Giofré, Maela, 2013. "Investor protection rights and foreign investment," Journal of Comparative Economics, Elsevier, vol. 41(2), pages 506-526.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kotaro Tsuru, 2000. "Finance and Growth: Some Theoretical Considerations and a Review of the Empirical Literature," OECD Economics Department Working Papers 228, OECD Publishing.
    2. Luigi Zingales & Raghuram G. Rajan, 2003. "Banks and Markets: The Changing Character of European Finance," NBER Working Papers 9595, National Bureau of Economic Research, Inc.
    3. Hellwig, Martin, 2000. "Corporate governance and the financing of investment for structural change," Papers 00-32, Sonderforschungsbreich 504.
    4. Dwenger, Nadja & Fossen, Frank & Simmler, Martin, 2015. "From financial to real economic crisis. Evidence from individual firm-bank relationships in Germany," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113000, Verein für Socialpolitik / German Economic Association.
    5. Bushman, Robert M. & Smith, Abbie J., 2001. "Financial accounting information and corporate governance," Journal of Accounting and Economics, Elsevier, vol. 32(1-3), pages 237-333, December.
    6. Schleicher, Thomas & Tahoun, Ahmed & Walker, Martin, 2010. "IFRS adoption in Europe and investment-cash flow sensitivity: Outsider versus insider economies," The International Journal of Accounting, Elsevier, vol. 45(2), pages 143-168, June.
    7. Rizov, Marian, 2008. "Corporate capital structure and how soft budget constraints may affect it," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 22(4), pages 648-684.
    8. Levine, Ross, 2005. "Finance and Growth: Theory and Evidence," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 12, pages 865-934, Elsevier.
    9. Utrero-Gonzalez, Natalia, 2007. "Banking regulation, institutional framework and capital structure: International evidence from industry data," The Quarterly Review of Economics and Finance, Elsevier, vol. 47(4), pages 481-506, September.
    10. Wang, Jingwen & Shen, Guangjun & Tang, Dunzhe, 2021. "Does tax deduction relax financing constraints? Evidence from China's value-added tax reform," China Economic Review, Elsevier, vol. 67(C).
    11. Paulo, Alves, 2018. "Abnormal retained earnings around the world," Journal of Multinational Financial Management, Elsevier, vol. 46(C), pages 63-74.
    12. Nadja Dwenger & Frank M Fossen & Martin Simmler, 2015. "From financial to real economic crisis: evidence from individual firm¨Cbank relationships in Germany," Working Papers 1516, Oxford University Centre for Business Taxation.
    13. Martinsson, Gustav, 2009. "Finance and R&D Investments - is there a debt overhang effect on R&D investments?," Working Paper Series in Economics and Institutions of Innovation 174, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    14. Anna GIUNTA & Domenico SARNO, 2009. "Firm’S Financing And Industrial Structure In The Less Developed Regions Of The South Italy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(4(10)_Win), pages 509-525.
    15. Aldrighi, Dante Mendes, 2003. "The Mechanisms of Corporate Governance in the United States: an Assessment," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 57(3), July.
    16. Marco Botta & Luca Colombo, 2016. "Macroeconomic and Institutional Determinants of Capital Structure Decisions," DISCE - Working Papers del Dipartimento di Economia e Finanza def038, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    17. Cumming, Douglas J., 2005. "Capital structure in venture finance," Journal of Corporate Finance, Elsevier, vol. 11(3), pages 550-585, June.
    18. Céspedes, Jacelly & González, Maximiliano & Molina, Carlos A., 2010. "Ownership and capital structure in Latin America," Journal of Business Research, Elsevier, vol. 63(3), pages 248-254, March.
    19. Valérie Revest & Alessandro Sapio, 2012. "Financing technology-based small firms in Europe: what do we know?," Small Business Economics, Springer, vol. 39(1), pages 179-205, July.
    20. Mário Santos & António Moreira & Elisabete Vieira, 2014. "Ownership concentration, contestability, family firms, and capital structure," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 18(4), pages 1063-1107, November.

    More about this item

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jinsec:v:2:y:2006:i:01:p:67-90_00. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/joi .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.