Does Economic Structure Determine Financial Structure?

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  • 1 January 2016
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      • Published in RePEc
Abstract
In this paper, we examine the relationship between the structure of the real economy and a country's financial system. We consider whether the development of the real economic structure can predict the direction of evolution of a country’s financial structure. Using data for 100 countries, we find a significant positive relationship between real economic structure and financial structure. We find that changes in the economic structure of a country influence the evolution of its financial system. This suggests that financial institutions and capital markets change in response to the structure of industries.
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