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...

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Main Authors:	Beck, Thorsten, Levine, Ross
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTING STANDARDS ANNUAL GROWTH ANNUAL GROWTH RATE BANK CREDIT BANKING SECTOR BANKS BOARDS OF DIRECTORS CAPITAL ACCUMULATION CAPITAL EXPENDITURES CAPITALIZATION CASH FLOWS CIVIL LAW COMMON LAW COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES CONTRACT ENFORCEMENT CORPORATE PROFITS COUNTRY DATA COUNTRY GROWTH REGRESSIONS COUNTRY VARIATION DEBT DEPENDENT VARIABLE DESCRIPTIVE STATISTICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL RESULTS ENTREPRENEURSHIP EXTERNAL FINANCE FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS GDP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES INCOME INDEPENDENT VARIABLES INSTITUTIONAL DEVELOPMENT LARGE SHAREHOLDERS LEGAL ORIGIN LEGAL SYSTEMS LIQUID MARKETS LIQUIDATION LIQUIDITY MARKET CAPITALIZATION NATIONAL OUTPUT NEGATIVE SIGN POLICY RESEARCH PRIVATE CREDIT PRIVATE SECTOR REORGANIZATION RESOURCE ALLOCATION REVERSE CAUSALITY RULE OF LAW SECTOR ACTIVITY SHAREHOLDERS SIGNIFICANT IMPACT STOCK MARKET STOCK MARKETS STOCK PRICES TAKEOVER TRANSACTION COSTS TRANSACTIONS COSTS VALUE ADDED
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

id	okr-10986-19840
recordtype	oai_dc
spelling	okr-10986-198402021-04-23T14:03:46Z New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter? Beck, Thorsten Levine, Ross ACCOUNTING STANDARDS ANNUAL GROWTH ANNUAL GROWTH RATE BANK CREDIT BANKING SECTOR BANKS BOARDS OF DIRECTORS CAPITAL ACCUMULATION CAPITAL EXPENDITURES CAPITALIZATION CASH FLOWS CIVIL LAW COMMON LAW COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES CONTRACT ENFORCEMENT CORPORATE PROFITS COUNTRY DATA COUNTRY GROWTH REGRESSIONS COUNTRY VARIATION DEBT DEPENDENT VARIABLE DESCRIPTIVE STATISTICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL RESULTS ENTREPRENEURSHIP EXTERNAL FINANCE FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS GDP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES INCOME INDEPENDENT VARIABLES INSTITUTIONAL DEVELOPMENT LARGE SHAREHOLDERS LEGAL ORIGIN LEGAL SYSTEMS LIQUID MARKETS LIQUIDATION LIQUIDITY MARKET CAPITALIZATION NATIONAL OUTPUT NEGATIVE SIGN POLICY RESEARCH PRIVATE CREDIT PRIVATE SECTOR REORGANIZATION RESOURCE ALLOCATION REVERSE CAUSALITY RULE OF LAW SECTOR ACTIVITY SHAREHOLDERS SIGNIFICANT IMPACT STOCK MARKET STOCK MARKETS STOCK PRICES TAKEOVER TRANSACTION COSTS TRANSACTIONS COSTS VALUE ADDED 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. 2014-08-28T18:49:36Z 2014-08-28T18:49:36Z 2000-06 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 English en_US Policy Research Working Paper;No. 2383 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING STANDARDS ANNUAL GROWTH ANNUAL GROWTH RATE BANK CREDIT BANKING SECTOR BANKS BOARDS OF DIRECTORS CAPITAL ACCUMULATION CAPITAL EXPENDITURES CAPITALIZATION CASH FLOWS CIVIL LAW COMMON LAW COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES CONTRACT ENFORCEMENT CORPORATE PROFITS COUNTRY DATA COUNTRY GROWTH REGRESSIONS COUNTRY VARIATION DEBT DEPENDENT VARIABLE DESCRIPTIVE STATISTICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL RESULTS ENTREPRENEURSHIP EXTERNAL FINANCE FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS GDP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES INCOME INDEPENDENT VARIABLES INSTITUTIONAL DEVELOPMENT LARGE SHAREHOLDERS LEGAL ORIGIN LEGAL SYSTEMS LIQUID MARKETS LIQUIDATION LIQUIDITY MARKET CAPITALIZATION NATIONAL OUTPUT NEGATIVE SIGN POLICY RESEARCH PRIVATE CREDIT PRIVATE SECTOR REORGANIZATION RESOURCE ALLOCATION REVERSE CAUSALITY RULE OF LAW SECTOR ACTIVITY SHAREHOLDERS SIGNIFICANT IMPACT STOCK MARKET STOCK MARKETS STOCK PRICES TAKEOVER TRANSACTION COSTS TRANSACTIONS COSTS VALUE ADDED
spellingShingle	ACCOUNTING STANDARDS ANNUAL GROWTH ANNUAL GROWTH RATE BANK CREDIT BANKING SECTOR BANKS BOARDS OF DIRECTORS CAPITAL ACCUMULATION CAPITAL EXPENDITURES CAPITALIZATION CASH FLOWS CIVIL LAW COMMON LAW COMPARATIVE ADVANTAGE COMPARATIVE ADVANTAGES CONTRACT ENFORCEMENT CORPORATE PROFITS COUNTRY DATA COUNTRY GROWTH REGRESSIONS COUNTRY VARIATION DEBT DEPENDENT VARIABLE DESCRIPTIVE STATISTICS ECONOMIC ACTIVITY ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC PERFORMANCE EMPIRICAL RESULTS ENTREPRENEURSHIP EXTERNAL FINANCE FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIARIES FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FINANCIAL SERVICES FINANCIAL STRUCTURE FINANCIAL SYSTEM FINANCIAL SYSTEMS FINANCIAL TRANSACTIONS GDP GROSS DOMESTIC PRODUCT GROWTH RATE GROWTH RATES INCOME INDEPENDENT VARIABLES INSTITUTIONAL DEVELOPMENT LARGE SHAREHOLDERS LEGAL ORIGIN LEGAL SYSTEMS LIQUID MARKETS LIQUIDATION LIQUIDITY MARKET CAPITALIZATION NATIONAL OUTPUT NEGATIVE SIGN POLICY RESEARCH PRIVATE CREDIT PRIVATE SECTOR REORGANIZATION RESOURCE ALLOCATION REVERSE CAUSALITY RULE OF LAW SECTOR ACTIVITY SHAREHOLDERS SIGNIFICANT IMPACT STOCK MARKET STOCK MARKETS STOCK PRICES TAKEOVER TRANSACTION COSTS TRANSACTIONS COSTS VALUE ADDED Beck, Thorsten Levine, Ross New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
relation	Policy Research Working Paper;No. 2383
description	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.
format	Publications & Research :: Policy Research Working Paper
author	Beck, Thorsten Levine, Ross
author_facet	Beck, Thorsten Levine, Ross
author_sort	Beck, Thorsten
title	New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
title_short	New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
title_full	New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
title_fullStr	New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
title_full_unstemmed	New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?
title_sort	new firm formation and industry growth : does having a market- or bank-based system matter?
publisher	World Bank, Washington, DC
publishDate	2014
url	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
_version_	1764441538115403776

New Firm Formation and Industry Growth : Does Having a Market- or Bank-Based System Matter?

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