Financial structure and economic growth

Abstract

Using the FMOLS method on a data sample of six Asian countries provided by World Bank, this paper aims at examining the effects of financial structure and development on a country’s economy and also economic growth. Our results show that financial structure and evelopment do affect a country’s economy and economic growth. There also exists a diversity in ountries’ suitability with each type of financial structure. South Korea and Malaysia suit a bank-based financial system, whereas Vietnam suits a market-based financial system, and Thailand favors a neutral system, benefiting from the growth of financial services’ growth in quality and quantity. Besides the main estimation function, the results of additional estimation functions also support our original conclusion.