Choosing the Right Financial System for Growth
Feb 28, 2000
James R. Barth, Daniel E. Nolle, Hilton L. Root and Glenn Yago

Evidence from countries around the world confirms the theory that financial systems play an essential role in promoting economic growth and development. The financial crisis in Southeast Asia that began in 1997 has shown that even otherwise strong economies may collapse when the foundations underlying their financial systems are weak.

Can developed countries - many of whose economies have also experienced crises - provide examples of how to avoid financial failure? And given the radically different financial structures found among developed economies, how can a developing country assess what institutions best suit its particular circumstances?

Extensive global financial data have been assembled for this study for the purpose of assisting policymakers in their search for the financial institutions that best sustain economic growth and prosperity.