Bank-based or market-based financial systems: Which is better?

For over a century, economists and policymakers have debated the relative merits of bank-based versus market-based financial systems. Recent research, however, argues that classifying countries as bank- or market-based is not a er fruitful way to distinguish financial systems, This paper represents the first broad. Cross-country examination of which view of financial Structure is more consistent with the data, The results indicate that although overall financial development is robustly linked with economic growth, there is no support for either the bank-based or the market-based view. (C) 2002 Elsevier Science (USA).