Ross Levine

The recent financial crisis was an accident, a “perfect storm” fueled by an unforeseeable confluence of events that unfortunately combined to bring down the global financial systems. And policy makers? They did everything they could, given their limited authority. It was all a terrible, unavoidable accident. Or at least this is the story told and retold by a chorus of luminaries that includes Timothy Geithner, Henry Paulson, Robert Rubin, Ben Bernanke, and Alan Greenspan.

This is the first broad cross-country assessment of the ties between financial structure—the mix of financial instruments, institutions, and markets in a given economy—and economic growth since Raymond Goldsmith's 1969 landmark study. Most studies focus on developed countries and compare bank-based and market-based systems. Debates over the relative merits of the two systems have relied on case studies of Germany, Japan, the United Kingdom, and the United States, countries with similar long-run growth rates.