Growth and Employment in Europe: Sustainability and Competitiveness, Department of Economics, WU (Wirtschaftsuniversität Wien)
No 31:
Convergence of financial systems: Towards an evolutionary perspective
Werner Hölzl ()
Abstract: This paper provides an evolutionary perspective on
financial systems based on complex systems theory. This perspective is used
to organize the discussion about the convergence and non-convergence of
financial systems. In recent years the discussion about the relative merits
and the efficiency of market- and bank-based financial systems is subject
to considerable academic and policy debate throughout the world. Bank- and
market-based systems are found to give rise to different economic and
corporate dynamics. Based on a notion of financial systems as configuration
of complementary elements, it is suggested that the convergence of
financial systems is best conceptualized as path dependent process of
institutional change. This is illustrated with special reference to the
recent developments of convergence of financial systems in Europe. The
implication of the evolutionary perspective on financial systems is that
neither theories using a simple evolutionary argument of survival of the
fittest nor theories related to a institutional ossification perspective
can provide much guidance for analyzing the transformations of financial
systems. A multilevel institutional analysis which takes the
interdependencies between national and firm-level institutions explicitly
into account is required. Creation-Date: 2003-08
Keywords: Institutional convergence; financial system; NK model; systems competition; path dependency; corporate governance; (follow links to similar papers)
JEL-Codes: G20,; G34,; O16,; P51; (follow links to similar papers)
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