Financial Structure



The financial structure of an economy is the set of institutions that channel resources from its savers to its investors, allocate them across alternative uses, and enable investors to share risks and diversify their portfolios. These functions can be performed by capital markets or by financial intermediaries that match savers and borrowers independently of markets. In Europe, banks dominate financial intermediation, and their dominance has increased over the 1990s and early 2000s, particularly in comparison with other developed economies such as the United States and Japan. This chapter attributes Europe’s increasingly bank-based financial structure to misguided policy choices. Evidence from an emerging literature indicates that these choices have worsened Europe’s long-term economic growth prospects and rendered it more susceptible to financial crises.


European Union Gross Domestic Product Capital Market House Price Venture Capital Firm 
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Copyright information

© The Author(s) 2016

Authors and Affiliations

  1. 1.European Systemic Risk BoardFrankfurtGermany
  2. 2.Department of Economics and StatisticsUniversity of Naples Federico IINaplesItaly

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