Financial Structure and Economic Growth

Financial Structure and Economic Growth

A Cross-Country Comparison of Banks, Markets, and Development

Edited by Asli Demirgüç-Kunt and Ross Levine

Hardcover $50.00 S £40.00
Paperback $19.75 X £15.99





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. The absence of data on developing countries limits the usefulness of such studies for policy makers.

The book contains recently acquired cross-country data from almost 150 countries. It includes information on the size, efficiency, and activity of banks, insurance companies, pension and mutual funds, finance companies, and stock and bond markets. It also incorporates information on each country's political, economic, and social environment. The chapters contain a mix of case studies, cross-country studies, macro- and micro-oriented approaches, and analytical and empirical work. The conclusions point not to markets versus banks, but to markets and banks. It is how well a financial system functions that is critical for long-run economic growth. The research suggests that strong legal rights for outside investors and the overall efficiency of contract enforcement are effective tools for developing the financial sector and the economy. The book includes a CD containing World Bank data.


Out of Print ISBN: 9780262041980 444 pp. | 7 in x 9 in 41 illus.


$19.75 X | £15.99 ISBN: 9780262541794 444 pp. | 7 in x 9 in 41 illus.


Asli Demirgüç-Kunt

Asli Demirgüç-Kunt is Director of Development Policy in the World Bank's Development Economics Vice Presidency and Chief Economist of the Financial and Private Sector Development Network (FPD). She is the coeditor of Financial Structures and Economic Growth: A Cross-Country Comparison of Banks, Markets, and Development (MIT Press, 2001).

Ross Levine

Ross Levine is the Willis H. Booth Chair in Banking and Finance at the University of California, Berkeley, and Senior Fellow at the Milken Institute.


  • ...this book is undeniably a valuable contribution.

    International Affairs


  • A collection of some of the best recent work on financial structure and economic development. The book also gives a detailed description of the World Bank's fantastic new data set—what's in it and why—and provides the data on a CD.

    John H. Boyd

    Chair, Finance Department, and Kappel Chair in Business and Government, Carlson School, University of Minnesota

  • With high-quality cross-country empirical work and a wide range of in-depth case studies, this book extends Allen and Gale's recent book on the role of banks versus markets. It settles convincingly a long debate: it is not banks versus markets, it is markets and banks. A must read for policy makers and academics alike interested in the role of finance in economic development.

    Stijn Claessens

    Professor of International Finance, University of Amsterdam

  • This is a great book. It provides a thorough and comprehensive account of the evolution of financial systems as well as the importance of financial structure for economic growth in countries around the world. For anyone interested in understanding the crucial role finance plays in shaping a country's future, this book is a must read.

    James R. Barth

    Lowder Eminent Scholar in Finance, Auburn University, and Senior Finance Fellow, Milken Institute