Two faces of financial systems: provision of services versus shock-smoothing

Vinogradov, D. and Makhlouf, Y. (2021) Two faces of financial systems: provision of services versus shock-smoothing. Journal of International Financial Markets, Institutions and Money, 75, 101456. (doi: 10.1016/j.intfin.2021.101456)

Abstract

Banks and financial markets contribute to economic growth directly – by providing information, liquidity and other services to investors and borrowers, and indirectly – by dampening the impact of exogenous shocks on growth. Do banks and markets perform equally well in both? Our panel of 44 developing and 29 developed countries in 1975–2017 demonstrates significance of only the service channel in advanced economies: they perform better if they are market-based. In less developed economies financial structure has no direct relevance for growth but offers shock-smoothing advantages through banks; market trading activity makes shocks absorbed faster and transmitted to the real sector quicker.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Vinogradov, Professor Dmitri

Creator Roles

Vinogradov, D.: Data curation, Writing – original draft, Writing – review and editing

• Authors: Vinogradov, D., and Makhlouf, Y.
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Journal of International Financial Markets, Institutions and Money
• Publisher: Elsevier
• ISSN: 1042-4431
• ISSN (Online): 1873-0612
• Published Online: 20 October 2021
• Copyright Holders: Copyright © 2021 Elsevier B.V.
• First Published: First published in Journal of International Financial Markets, Institutions and Money 75: 101456
• Publisher Policy: Reproduced in accordance with the publisher copyright policy