Financial Structure and Economic Growth in Different Country Groups

Date of Award


Document Type


Degree Name

Bachelor of Arts



First Advisor

Monica Das


This study examines how the financial structure and economic growth are related, focusing on how the relationship differs based on the country’s development stage. There are four competing theories of financial structure and growth: the bank based view, the market based view, the financial services view and the legal based view. Using the random coefficients model with three country groups—developing economies, transition economies, and developed economies—this study analyzes a panel data set of 42 countries from 1996 to 2015. The results show different implications in different groups. In developing countries, results show no support for any of the four theories; in transition countries, the results show support for market based view; in developed countries, the results show support for the market based view and the legal based view. There are some limitations in the data and the model, however, to conclude that the results provide a strong support for the conclusions made in each group.

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