Financial system structure and economic growth: Structure matters

This paper investigates how the structure of a financial system-whether it is bank or market-oriented-affects economic growth. In contrast to earlier research, which indicates that the financial system's structure is irrelevant for growth, I find that there is a nonlinear (contingent) relationship between growth and financial structure, Countries that have an inflexible judicial system grow faster when they have a more bank-oriented financial system. (C) 2006 Elsevier Inc. All rights reserved.