COMPARING FINANCIAL SYSTEMS: A STRUCTURAL ANALYSIS y
Year: 2006
Type: preprint
Abstract: This paper presents an equilibrium model of the flnancial system with heterogenous flrms and two flnancial instruments, market and intermediated flnance. The model generates, at the industry level, endogenous distributions of flrm sizes and shares of market flnance in total external flnance given exogenous industry-level distributions of productivity across flrms and exogenous country- level flnancing costs. We estimate the implied relative cost of market flnance using data on France, Germany, Italy, Spain and the UK and flnd that the UK has a larger share of market flnance than continental countries, but this is explained by larger flrms and not lower relative cost of market flnance. The model is also used to explore the welfare consequences of the complementarity between production and the flnancial instruments.
Source: SSRN Electronic Journal
Author: Sylvain Champonnois
Institution: Princeton University
Language: English
Topic: Economic theories and models
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W1487771150