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Comparing Financial Systems: A structural Analysis

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  • Sylvain Champonnois

    (Economics Princeton University)

Abstract

This paper investigates whether the financial markets are relatively more efficient than banks in the UK than in continental Europe. The UK channels a larger fraction of the financial flow to the firms through financial markets than continental Europe but this is explained by larger firms in the UK, not relatively more efficient markets. This conclusion is drawn from an industry-level structural estimation using data on the UK, France, Germany and Italy. The structural model is based on a novel theory of capital allocation and investment in which the decisions of heterogenous firms across financing instruments are aggregated in closed-form

Suggested Citation

  • Sylvain Champonnois, 2006. "Comparing Financial Systems: A structural Analysis," 2006 Meeting Papers 520, Society for Economic Dynamics.
    • Handle: RePEc:red:sed006:520
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    References listed on IDEAS

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    Cited by:

    1. Solomon, Bernard-Daniel, 2008. "Banks as Better Monitors and Firms' Financing Choices in Dynamic General Equilibrium," MPRA Paper 23958, University Library of Munich, Germany, revised 01 Jun 2010.
    2. Russ, Katheryn N. & Valderrama, Diego, 2012. "A theory of bank versus bond finance and intra-industry reallocation," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 652-673.
    3. Giovanni Dosi & Valerie Revest & Alessandro Sapio, 2016. "Financial regimes, financialization patterns and industrial performances: preliminary remarks," LEM Papers Series 2016/25, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Costinot, Arnaud, 2007. "Heterogeneity and Trade," University of California at San Diego, Economics Working Paper Series qt4ns3899g, Department of Economics, UC San Diego.

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    More about this item

    Keywords

    Financial structure; bank finance; market finance; heterogenous firms; structural estimation;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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