Financial Structure and Financial Crisis

this paper investigates the relationship between financial structure and financial crisis based on the cross-country data of 55 countries.The empirical results show that:(1) financial structure has a significant impact on the probability of financial crisis,that is,countries with market-based financial systems are more prone to financial crisis than those with bank-based financial systems;(2) for all sample countries that had a financial crisis,the slowdown of economic growth in countries with market-based financial systems is more severe than those with bank-based financial systems;(3) the probability of financial crisis rises as the expansion of financial market and falls as the growth of banking industry.The above conclusion tends to indicate that in the two major parts of financial structure,banks play a certain role of financial stabilizer while financial market may contain some unstable factors.