Arbeitspapier
Financial Development, Financial Structure, and Domestic Investment: International Evidence
Does it matter for domestic investment whether a country's financial system is bank based or stock-market based? This paper posits that financial intermediation affects domestic investment notably by alleviating financing constraints, allowing firms to increase investment in response to increased demand for output. The key result is that the structure of the financial system has no independent effect on investment, in the sense that it does not enhance the response of investment to changes in output, while financial development makes investment more responsive to output growth. Consequently, rather than promoting a particular type of financial structure, countries should implement policies that reduce transactions costs in financial intermediation and enforce creditor and investor rights. This will facilitate the development of banks and stock markets, which will stimulate domestic investment.
- Language
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Englisch
- Bibliographic citation
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Series: Working Paper ; No. 2003-01
- Classification
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Wirtschaft
- Subject
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domestic investment
financial development
financial structure
bank-based systems
stock-market-based systems
- Event
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Geistige Schöpfung
- (who)
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Ndikumana, Léonce
- Event
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Veröffentlichung
- (who)
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University of Massachusetts, Department of Economics
- (where)
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Amherst, MA
- (when)
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2003
- Handle
- Last update
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10.03.2025, 11:45 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ndikumana, Léonce
- University of Massachusetts, Department of Economics
Time of origin
- 2003
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