ABSTRACT. Financial systems are generally classified as being bank-based or market-based. This paper compares the characteristics of major financial systems on the basis of financing channels, legal system, governance models, cost of debt, and shareholding structure. It explains how the financial market is dominant in Anglo-Saxon countries like Canada, the United States or Great Britain, with a common law system, a shareholder governance model, lower cost of debt, and scattered ownership. On the other hand, the banking system is predominant in continental Europe countries like France and Germany, with a code law system, a stakeholder governance model, higher cost of debt, and concentrated ownership.
JEL codes: D53; E44; F36; G15; O16

Keywords: financial systems; financial markets; banking system; governance model; cost of debt

How to cite: Zogning, Felix (2017), “Comparing Financial Systems around the World: Capital Markets, Legal Systems, and Governance Regimes,” Economics, Management, and Financial Markets 12(4): 43–58.

Received 16 November 2016 • Received in revised form 16 January 2017
Accepted 16 January 2017 • Available online 30 January 2017


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