Huizinga, HarryDemirgüç-Kunt, Aslı2015-01-302015-01-302000-08https://hdl.handle.net/10986/21368Countries differ in the extent to which their financial systems are bank-based or market-based. The financial systems of Germany and Japan, for example, are considered bank-based because banks play a leading role in mobilizing savings, allocating capital, overseeing investment decisions of corporate managers, and providing risk management vehicles. The systems of the United States, and the United Kingdom are considered more market-based. Using bank-level data for a large number of industrial and developing countries, the authors present evidence about the impact of financial development, and structure on bank performance. They measure the relative importance of bank or market finance by the relative size of stock aggregates, by relative trading or transaction volumes, and by indicators of relative efficiency. They show that in developing countries, both banks and stock markets are less developed, but financial systems tend to be more bank-based. The richer the country, the more active are all financial intermediaries. The greater the development of a country's banks, the tougher is the competition, the greater is the efficiency, and the lower are the bank margins, and profits. The more under-developed the stock market, the greater are the bank profits. But financial structure per se does not have a significant, independent influence on bank margins, and profits.en-USCC BY 3.0 IGOaccountingassetsassets of deposit moneyassets of deposit money banksbalance sheetbalance sheetsbank assetsbank lendingbank performancebank profitsbanking sectorbanking sector developmentbanking systembankruptcybanksbook valueborrowingcapital adequacycapitalizationcentral bankcentral bank assetscommercial bankcontract enforcementcorporate financecorporate managerscountry datacredit riskcreditor rightsdeposit interestdeposit ratesdepositsdeveloped countriesearning assetsearning powereconomic developmenteconomic growtheconomistsempirical evidencefinancial dependencefinancial developmentfinancial intermediariesfinancial regulationfinancial sectorfinancial structurefinancial structuresfinancial systemfinancial systemsforeign banksGDPGDP per capitahigh interest ratesincomeincome groupsincome statementsinflationinterest expenseinterest incomeinterest margininterest rateinterest ratesinternational bankinglending ratesloan defaultslow interestmarket capitalizationmonetary economicsnet interest marginoperating costsoverhead costspolitical economyprivate sectorprofitabilityregression analysisrisk managementsavingsstock marketstock marketstaxationwagesfinancial systemsbank ratingsprofitabilitybanking regulationmarket-based instrumentssavings behaviorcapital assetsinvestmentsrisk managementindustrialized societiesdeveloping countriesfinancial developmentperformance indicatorsstock marketstrading arrangementstransactionscompetition policy10.1596/1813-9450-2430