New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
The authors find no evidence for the superiority of either market-based or bank-based financial systems for industries dependent on external financing. But they find overwhelming evidence that industries heavily dependent on external finance grow f...
| Main Authors: | , |
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| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2000/06/437118/new-firm-formation-industry-growth-having-market--or-bank-based-system-matter http://hdl.handle.net/10986/19840 |
| Summary: | The authors find no evidence for the
superiority of either market-based or bank-based financial
systems for industries dependent on external financing. But
they find overwhelming evidence that industries heavily
dependent on external finance grow faster in economies with
higher levels of financial development, and with better
legal protection for outside investors - including strong
creditor and shareholder rights and strong contract
enforcement mechanisms. Financial development also
stimulates the establishment of new firms, which is
consistent with the Schumpeterian view of creative
destruction. Financial development matters. That the
financial system is bank-based on market-based offers little
additional information. |
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