Working Paper
Why do financial systems differ? History matters
Abstract: We describe a dynamic model of financial intermediation in which fundamental characteristics of the economy imply a unique equilibrium path of bank and financial market lending. Yet we also show that economies whose fundamental characteristics have converged may continue to have very different financial structures. Because setting up financial markets is costly in our model, economies that emphasize financial market lending are more likely to continue doing so in the future, all else equal.
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https://fraser.stlouisfed.org/title/7140/item/646663
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Bibliographic Information
Provider: Federal Reserve Bank of Dallas
Part of Series: Center for Latin America Working Papers
Publication Date: 2004
Number: 0304