بانک ها، بازارهای مالی و رشد اقتصادی

We analyze the interaction between bank and market finance in a model where bankers gather information through monitoring and screening. We show that if a market characterized by a disclosure law is established such that entrepreneurs wishing to raise market finance can credibly disclose their sources of financing, this might undermine bankers' incentive to screen, even when screening is efficient. Correspondingly, other things being equal, the change from a bank-based system to one in which market-finance and bank-finance coexist might have an adverse affect on economic growth. Consistent with this result, our empirical findings suggest that both bank and stock market development have a positive effect on growth, but the growth impact of bank development is lower the higher is the level of stock market development.

The large body of literature on finance and growth offers several explanations as to why financial institutions facilitate economic growth.1 Financial institutions mobilize savings, diversify risk and produce information about investment opportunities. These functions help to improve the productivity of financed investments, which should result in higher growth rates provided that the returns to accumulable inputs are nondiminishing at an aggregate level. Consistent with this theoretical proposition, several empirical studies find that financial development can be strongly related to the process of economic growth, although the strength and the sign of such a relationship might vary with the level of economic development and other country-specific factors.2 An important aspect of the relationship between finance and growth is the way in which the financial structure, proxied by the importance of financial institutions such as banks relative to financial markets, affects the allocation of financial resources. Crucially relevant to this issue is the observation that when the economy is characterized by informational imperfections such that markets are incomplete, financial institutions and capital markets might affect each other in a nontrivial way. For instance, Allen and Gale (1997) demonstrate that while banks can provide more effective intertemporal risk smoothing than financial markets, their effectiveness in performing this role crucially depends on the degree of competition from the markets. Strong competition might result in disintermediation, undermining banks' ability to provide intertemporal risk smoothing. Boot and Thakor (1997) study the interaction between banks and markets. Their theory of financial system architecture is based on three types of informational asymmetries: imperfect knowledge about the quality of investment projects available to borrowers; possible post-lending moral hazard; uncertainty as to whether an individual borrower would be prone to moral hazard. While the last two types of information asymmetry can be better solved by banks, the first one is more efficiently tackled by financial markets. As a result, they show that the equilibrium financial structure consists of an optimal combination of bank credit and market finance. Interestingly, in their framework, as the financial system develops and borrowers gain reputation, capital markets expand at the expense of banks. Subrahmanyam and Titman (1999) build a model that explains private versus public financing, based on the costs of acquiring information and the importance of serendipitous information in capital markets. In their model, the value of firms which decide to go public depends positively on the size of the market for public financing. This implies the existence of an externality associated with the decision to go public such that an equilibrium could exist where the number of firms going public is inefficiently low. In this paper, we study the interaction between financial investors that gather information about investment opportunities and a financial market where information is disclosed, and derive the consequences for the allocation of financial resources. We find that the establishment of a financial market characterized by a disclosure law such that entrepreneurs can credibly disclose their sources of financing may undermine financial institutions' incentives to screen the quality of the investments they finance. This might occur even if screening would have been efficient. Applying this result in the context of a growth model we show that, other things being equal, the change in the financial structure resulting from the introduction of such disclosure law could affect the equilibrium growth rate of the economy in an adverse way. We construct a simple model of a competitive financial system in which financial investors provide funds to entrepreneurs. Financial investors can monitor (and screen) the entrepreneurs they fund, in which case we call them bankers. Alternatively, they can purchase financial securities, in which case we call them market investors. Entrepreneurs can either rely on bankers to finance their investments (bank-finance) or issue financial securities in the market (market-finance), or both. We first present a set-up in which the main source of imperfect information is that entrepreneurs' investment decisions are private, i.e. nonobservable by third parties. This gives rise to a moral hazard problem since by assumption entrepreneurs have the incentive to choose negative net present value (NPV) investments. Accordingly, there is scope for bankers to monitor, which would eliminate the moral hazard issue. Monitoring is costly, nonverifiable and nonobservable. Thus, similar to the model by Holmstrom and Tirole (1997), bankers need to be given the incentive to monitor. Because of monitoring costs, bank-finance is always more expensive than market-finance, and thus entrepreneurs aim at minimizing its use. On the other hand, financial investors are willing to supply market-finance only if they know that the entrepreneurs are being monitored. Since monitoring costs are fixed, a banker has the incentive to monitor an entrepreneur if and only if the amount of finance supplied by the banker to that entrepreneur does not fall below a certain minimum. Therefore, the amount of bank-finance raised by an entrepreneur is informative of whether that entrepreneur is subject to monitoring. If the financial market enforces a disclosure law, entrepreneurs can credibly disclose their sources of financing, thereby gaining access to market-finance. In this case, entrepreneurs' equilibrium capital structure is a mixture of market-finance and bank-finance, where the latter is kept at a minimum. Otherwise, without disclosure law, entrepreneurs cannot credibly disclose their sources of financing and market-investors are not informed as to whether entrepreneurs are monitored or not, so that bank finance is the only source of finance. In this simple model, the interaction between bank-finance and market-finance is irrelevant: the NPV of financed investment does not depend on whether the financial system comprises both market and bank finance or only the latter. A different conclusion is reached when the following additional assumptions are introduced: (a) there exist two qualities of investment yielding a positive NPV, with the better quality being associated with higher expected NPV; (b) the quality of investments is observable only by incurring a fixed screening cost.3 Screening is nonobservable and nonverifiable. Similarly to monitoring, a banker has the incentive to screen the quality of an entrepreneur's projects if and only if the finance supplied by the banker to that entrepreneur is enough to recover the fixed screening costs, given the expected gain due to the selection of high quality investments through screening. Therefore, the amount of bank-finance raised by an entrepreneur is not just informative of whether that entrepreneur is being monitored or not, but also of whether her investments are subject to screening or not. Still, if there is no disclosure law, entrepreneurs cannot credibly disclose their sources of financing to market investors. Therefore, bank-finance will be the only source of financing. Under these circumstances, bankers internalize all the benefits from screening and provide the efficient level of screening. Differently, when the disclosure law is in place, market investors become informed and the entrepreneurs can minimize the use of bank-finance by gaining access to market-finance. This might lead to an equilibrium in which the demand for bank-finance is so low that no screening takes place, even when screening would be efficient. Not all benefits from the screening process are internalized by bankers who incur the cost. By disclosing their sources of financing, entrepreneurs indirectly reveal the quality of their investment and as a result, market investors capture part of the benefits from screening without incurring any cost. Furthermore, due to the noncontractible nature of screening, the return required by bankers to have the incentive to screen is higher than what would be otherwise. This strengthens entrepreneurs' incentives to minimize the use of bank finance. These factors explain why an inefficient level of screening can occur. We find that, given the screening cost, for intermediate levels of the return to investment, either only a pooling equilibrium exists with no screening, irrespective of whether screening would have been efficient or not, or the pooling equilibrium coexists with the screening equilibrium. Only if the return on the best quality projects is sufficiently high, the equilibrium is always characterized by the efficient level of screening. These conclusions are incorporated in a simple overlapping generation model to show that, other things equal, the change from a system in which bank-finance is the only source of financing to a system characterized by the interaction between bank and market finance could have a negative effect on economic growth. This theoretical result has important implications for the ‘financial structure and growth’ debate (see Dolar and Meh (2002) for a recent review). A common view in this debate, is that while “[ …] Better-developed financial systems positively influence growth. It is relatively unimportant for economic growth [ …] whether overall financial development stems from bank or market development [ …]” (Levine, 2002, p. 400). This conclusion, which is referred to as the ‘financial service view’ has received empirical support from cross-sectional econometric studies such as Beck and Levine (2002) and Demirguc-Kunt and Levine (2001).4 Contrary to this view, our model predicts that as long as banks and market have distinct roles in the provision of information then the interaction between them may have an impact on growth. We analyze the growth impact of the interaction between stock market and banks using the same data set as Demirguc-Kunt and Levine (2001). Our empirical findings confirm the established result that both banking and stock market development are positively associated with higher real per capita growth. This positive relationship, however, hides some interesting interaction effects between these two components of the financial system, which have not been fully explored in the empirical literature. In particular, by modifying the standard cross-country growth regression model to include an interaction term between banking and stock market development we find that the growth impact of banking development is affected by the development of the stock market. Specifically, our results show a significant negative interaction effect implying that the impact of banking development on growth becomes less positive the higher is the level of stock market development. This is highly robust to alternative specifications and instrumental variables estimation. This finding is consistent with the model's conclusion that the interaction between bank and market-finance matters for growth. The paper is organized as follows. Section 2 presents a model where bankers perform only monitoring, while Section 3 introduces screening. Section 4 analyzes the implications for long-run economic growth. Section 5 presents the empirical evidence. A final section concludes the paper.

Although the growth-finance nexus has been heavily researched both at the theoretical and empirical level, the study of the relationship between financial structure and long-run economic growth has so far received much less attention. This paper analyzes the interaction between market and bank-finance in the context of a model characterized by imperfect information about the quality of investments and moral hazard. We show that the establishment of a financial market where entrepreneurs wishing to raise finance are subject to disclosure law regarding their capital structure might undermine financial institutions' incentive to screen, even when screening would have been efficient. Using this result we also show that the change from a bank-based financial system to a system in which market-finance and bank-finance coexist may impact long-run growth. This is contrary to the view which claims that higher financial development, regardless of its source, is always beneficial for economic growth. Using Demirguc-Kunt and Levine (2001) cross-country data set and modifying the standard growth regression to include an interaction between stock market and bank development, we find evidence which is consistent with our model. Specifically, we find a significant negative interaction effect, implying that at higher levels of stock market development, the contribution of bank development to long-run growth becomes less positive. These results offer a new perspective on the ‘financial structure and growth’ debate. They also have important policy implications, especially for developing and emerging countries which in the last two decades have aimed at introducing and/or reforming their stock markets, with varying degrees of success. If competition from the stock market undermines the role of bank and leads to disintermediation, then efforts directed at establishing a stock-market based system may not achieve its intended objectives.