Comparing the UK and the US Financial Systems - Essay Example

?COMPARING FINANCIAL SYSTEMS TABLE OF CONTENTS …………………………………………………………….. 3 2) CHAPTER 4 3) CHAPTER - 2 ……………………………………………………………6 4) CHAPTER - 3 ……………………………………………………………10 5) CHAPTER - 4 ……………………………………………………………11 6) CHAPTER - 5 ……………………………………………………………12 7) CHAPTER - 6 ……………………………………………………………15 8) CHAPTER – 7 ……………………………………………………………20 9) CHAPTER – 8…………………………………………………………….23 10) REFERENCES……………………………………………………………25 Abstract There has been immense talk about how the economic interrelations between countries across the globe have intensified. Economic globalization is the utopia towards which the world is moving. Yet, it is deemed to be practically impossible due to the different financial systems that exist in different countries. While some countries have a severely competitive market, others have a bank based economic system. Bank based system poses to secure ‘and mobilize savings, allocating capital, overseeing the investment decisions of corporate managers and also providing risk management vehicles.1’ Whereas, the market system is more competitive in a dual way. Different companies in the market are competing with each other and also the companies compete with the banks, which are still considered to be the conventional mode of getting savings earned by people. Yet, in the countries like U.K and U.S.A, people do risk to invest in the share markets and other companies which often help them earn more money than bank interest. Many analysts across the world have suggested that the market based financial system is more lucrative than the bank based system, but the risk factor involved is also very high as compared to the bank based system, which has minimal risk factor. Now a study on the different financial systems of the world is bound to raise crucial questions which will be chronologically answered in the report. Chapter 1 Broad Classification of the Financial Systems – Bank Versus Market The development of any country is based on the reforms introduced and to introduce any reform, a stable financial system is very necessary. Structural reforms are mostly based on the financial system of a country. Most developing nations which have a centralized economy lack a full fledged financial system which is a big disadvantage for them. Financial system has a vast positive impact of financial development on economic growth and development 2. The financial structure among countries can be either bank based or market based or underdeveloped. The underdeveloped economies have both underdeveloped banks and market values. But flourishing financial systems can fall into either bank based financial system or market based one. It is popularly assumed that bank based financial systems are less flourishing compared to the market based ones but Japan stands as the biggest flourishing example of bank based financial system. Countries with a stronger economy and monetary strength have better developed financial systems. The countries which have a higher income always tend to get inclined towards the market based financial system because in these countries the stock market has higher efficiency and are relatively more active compared to the banks. The countries which have low corruption and protect shareholder’s rights are more inclined to the banks as they are looking for security more than earning 3. The bank based concentrates on the different roles of the banks such as getting information about the firm, the board of directors and trying their best to improve the allocation of funds as well as corporate governance. It also tries to enhance its investment efficiency and its economy growth by the various risks involved. It also focuses on the problems related to market based system. The components of bank based system also concentrates on creating a better market for the investors by creating a liquid market. With the help of the liquid market investors would be able to sell their shares very easily in the market yet having a good control on corporate. Therefore according to bank based system a better market development may affect the corporate control as well as it may hinder the economic growth. Bank based system only hold those banks in which the work is not affected on the basis of financial regulations, in which it can over utilize in information processing and all of this can only lead to the better growth of economy. The marked based focuses on the growth of better functioning markets and by earning greater profits by trading on a bigger platform. Improving corporate governance through easy takeovers and easier in making a tie of managerial compensation of a firm’s performance. The market based concentrates on the problems relating to the banks especially banks which extract informational rents as well as protecting established firms by keeping a close tie relationship. These banks which are not governed by many numbers of financial regulations or rules can affect corporate governance. Therefore the components of market based concentrates on reducing the inefficiencies relating to the banks and therefore trying to enhance the economic development or growth. Chapter 2 Which Financial system is Better The question of which system is better has been a long standing debate to which history has stood evidence. Post the Second World War which ended in 1945, Germany developed itself on the lines of bank based financial system which helped Germany compete closely with Britain which was a flourishing economy with market based financial system and fast growing as a super industrial power. Moreover citing Japan as a perfect example, most economic analysts had predicted that with bank based financial system Japan would soon further than America as the World’s biggest economic power. Due to Japan’s internal problems and the country being constantly victimized by natural calamities, this prediction did not come true. Conventional modes have always deemed banks as safer compared to risky stock markets, portraying markets in a negative light. However market based financial system ensures a growing economy in the long run by providing incentives to investors, thus, making the market strong. The countries which are at early stages of development would always be advised to follow bank based financial system 4. The economists and economical analysts belonging to the school of legal based perspective of financial development have studied the various bank based financial systems and also the market based systems for decades and have finally come to the conclusion that the debate is pointless, or as they put it, analytically vacuous. The legal based perspective also theorizes that the issue must shift from debating over which is better to creating a healthy legal environment in which both bank based system and market based will thrive equally and co-exist harmoniously without encroaching on each other’s domains 5. For many years the debate over which is a better system still continues. A market based system is one in which the financial power is indicated by the amount of stocks that it holds in a stock market and not only the number of stocks it has is a factor but how well those stock it hold is doing actually in the market. In a market based system banks do not depend upon the interest that it generates from loans, it only gains major of its revenue from fees which are charged to the customers. In comparison to the market based system a bank system is one in which it depends upon the position of the banking industry whether it is generating revenue or incurring losses. Banks in the case of banked based system depend upon the interest that it generates from loans and this is the area in which it is most powerful. The stock market in banked based system hardly plays any role. In a market based system the money is being used in different areas unevenly. It is shifting minute after minute every individual in the society gets an opportunity to either gain or lose in the market during any day. It often observed that developed or in other words richer countries seem to have their economic system running on the stock market. Whereas in the bank based system the money is being used in different areas evenly. In this system every individual is not given a chance to grow, only a few get the opportunity to gain. This system can also work reversely as a few individuals who are alone at the bottom end of the economy. The market based system indentifies many banks which are operating on the basis of earning profits. Programs are set up accordingly in place whereas daily consumers can approach to non-banking places for any of its financial needs. Investments made by private systems as well as the government often find themselves competing with those banks, forcing these banks to adopt changes or adjust the work of approach or practices followed by them as well as their interest rates need to be changed in order to compete. In case of the bank based system their no involvement of the government in other words no assistance is provided by them and only a few of the private sector have the power to compete with the banks. Under this system the banks are supposed to be more helpful or manage the economy. Only a few of the members are expected to generate profit and is considered to be a stabilizing force. A great difference between these two systems is in the legal perspective or view. In the case of a bank based system laws which are implemented or set forth shall be carried out by the government. These assumptions are generated on civil law when compared to common law. The common law is less obvious and shall differ from case to case. Whereas in case of a marked based system common law is more often found. The civil law compared to common law seems to be less effective in terms of solving problems or conflicts because the civil law assumptions are based on traditional methods, they do not depend upon creating new rules and ensuring that they should work on those rules. As we know that there are only a few factors behind a market or bank based system, these factors are its most important factors. It is not easy to identify which a better system as the factors determined are next to impossible. All that we can do is decide which system suites what kind of situation or environment in other words in which it can exist more easily. Table 1: Properties of Financial systems -------------------------------------------------------------------------------------------------------------------- Bank-based Market-based -------------------------------------------------------------------------------------------------------------------- Share of control-oriented finance High ?Low Financial markets Small, less liquid Large, highly liquid Share of all firms listed on exchanges Small Large Ownership of debt and equity Concentrated Dispersed Investor orientation control-oriented Portfolio-oriented Use of mechanisms for separating Frequent Limited control and capital base Dominant agency conflict Controlling vs. Shareholders vs minority shareholders managers Role of board of directors Limited Important Role of hostile take-overs Very limited potentially important ------------------------------------------------------------------------------------------------------------------ Source: Bergl?of (1997), pp. 93–123, Table 1. Chapter 3 The need for different Financial Systems With the legal perspective theorizing that the debate over bank based financial system and market based financial system is futile; an important question is bound to strike our minds. What is the need for two separate financial systems? In the recent times, the world has seen a rapid movement towards a common global economic order, which was initiated in the Bretton Woods Conference in 1994 in which the participating countries came to an agreement of expanding international trade and also establish binding rules on economic activities. But despite Bretton Woods, the post War period since 1945 did show the inclination of different countries towards different financial systems. The financial system of the country largely depends on the structure of the country itself. As stated earlier, the market based system is for countries which are monetarily stronger. It is often presumed that both financial systems are to satiate the same needs of a country. But obviously each country has its own specifications on which the financial system is based. The developing nations would need to stabilize its economy and therefore prefer a bank based financial system. It is naturally assumed that the power of their currency would be lower and therefore it would be difficult for the currency to compete in the market with other stronger currencies. To divert people’s saving into the bank would be a sensible and a more feasible option that investing in the market. Similarly, the countries with stronger currency will be able to earn better from the market compared to the interests given to them through banks. In most developed nations which have market based financial system, even the banks heavily invest in the market. This might often backfire, like it did during the Great Depression of 1929- Wall Street Crash, pushing Americans into acute poverty. Chapter 4 Reasons for the shift towards market system Due to the pulling forces of modernization, the world has perhaps seen a sharp inclination towards market system. The market is becoming more modern in its approach. In countries like Germany, commercial banks are fast losing importance. Whereas France is fast transforming from a Germany Bank based system to a U.K Market based system because intermediation has been on a fast decline and securitization is rising in general. One of the most pivotal functions of the bank is their function to act as intermediaries, i.e., how much do their customers entrust them with their hard-earned money and to what extent does the bank channel these funds to deficit sectors, notably the companies. Due to the fast downfall of intermediation, the bank sector is lagging behind6. Modernization has initiated the establishment of a common global economic order. Superpowers like America are trying to convert financial systems into their style for their benefit, so that the common system facilitates free trading and develop a common stable exchange system. Modernization is often equated with Westernization or as most scholars say, Americanization. Economic analysts have pointed out that though this will help to facilitate a more efficient trading system, it was also be more beneficial for the richer countries. The richer countries would get richer, while the poor will simply get poorer. The financial system is the basic essence of the economy of the country. Transforming that would harm the economy of the country, because if the country is not equipped for a market based system it would incur heavy losses. Chapter 5 Legal based Perspective/View/Approach This view or approach indicates finance, are a set of contracts. The contracts shall be defined by its legal rights as well as its enforcing mechanism; it also shows how it is made more or less effective. According to this approach a well set legal system provides facilities that operate both the operations of markets as well as intermediaries. The legal system determines the overall output generated and the various qualities provided of the financial systems. There has been a long debate which is going on for decades now between market based against bank based but all the information gathered is of no use as these systems cannot seem to prove themselves which is superior over the other. The two financial system are being compared on the basis of legal based view which states that bank based view gives more importance to financial intervene in improving information which lack symmetry and internal transaction costs. This view indicates that bank based financial systems in various countries at its growing period of economic advancement is better than that compared to marked based financial systems. Whereas the marked based view gives more importance to better functioning of various types of securities in the market insuring better incentives to investors, insuring them that they can get access to any type of information as well as have the authority to get corporate control. This indicates that market based financial systems are good at promoting long economic development when compared to bank based financial systems. The legal based perspective indicates that it chooses market based over bank based. The legal based approach plays an important role in deciding the various levels and quality of the development of financial services. The data which is obtained indicates that legal based view is more consistent with its data. It also stresses on that point where the government can play a positive role in defining and implement property rights. More importantly it presents cases where it supports the view of generating legal codes that also support the right of the outside investors whether equity or debt and then they enforce these codes which are important for providing growth and enhancing financial services. Definitely it suggests that it would always be easier to understand cross country deviation in the quality of financial services by comparing the quality of legal based perspective instead on concentrating on bank based and marked based problems. The legal based view indicates that none of the systems that is marked based or bank based systems are important for the economic development. The legal based approach concentrates on the fact that the component of the overall financial sector growth which is created by the legal system is vital and is confidently linked to the longer growth. To understand this view one has to identify or measure the overall financial sector growth and identify the change in degree which the ‘legal system supports financial sector development’7. ‘Civil-law courts have been less effective in resolving conflicts than common-law courts because civil-law judges traditionally refrain from interpreting the codes and creating new rules. In a civil-law environment, where potential conflicts between borrowers and individual lenders inhibit the development of markets because the courts are unable to penalize defrauding borrowers, I show that banks can induce borrowers to honor their obligations , by threatening to withhold services that only banks can provide. In other words, banks emerge as the primary contract enforcers in economies where courts are imperfect.8’ ‘Likewise, Rajan and Zingales (2000) object to the connection LLSV make between market friendliness and legal tradition. Rajan and Zingales ?nd that France's stock market was much bigger as a fraction of its GDP than markets in the U.S. in 1913 (0.78 vs. 0.41). In 1980, roles had reversed (0.09 vs. 0.46) and in 1999, the difference between the two countries is no longer astonishing (1.17 vs. 1.52). Also, in the beginning of the 20th century, equity issues were more common in Germany than they were in United Kingdom. In the light of these facts, Rajan and Zingales assert that \the relative market friendliness of common-law countries uncovered by LLSV seems a fluctuating phenomenon, and is unlikely to be explained by something as permanent as the origin of the legal system. This conclusion, however, may be too strong in that it goes so far as to claim that a permanent legal tradition precludes fluctuations in the structure of the financial system. Rajan and Zingales do not clarify why this must be so. The mere observation that Investors were better-protected in civil-law countries at the turn of the 20th century is not enough to reject the connection between legal traditions and financial system Structure9.’ It has been widely argued that the access to better legal rights would automatically lead to a better developed and more powerful financial system. The most important function of legal tradition is to determine the structure financial system of the country. ‘Legal rights and regulations arise from the necessities of this structure.’ The regulations are actually the final product of the system and therefore it is in no position to determine the financial system. There is a common notion that ‘relationship-based systems are superior to market-based systems in environments where laws are poorly drafted and enforced has been mentioned in Rajan and Zingales (1998).’ But to the contrary, where the judicial system is presumed to be efficient, the vast ‘differences in legal traditions may be enough to explain why German and French financial systems are bank-dominated, while English and American systems are market-dominated. Finally, although model bank loan commitments are a unique bank service that capital markets are unable to provide, there is nothing in the model that prevents other non-bank financial intermediaries from offering a similar service.’ The results of most surveys results go beyond a mere versus comparisons of bank systems and markets systems, ‘to a comparison of intermediated and un-intermediated sectors.10’ Chapter 6 Effects of Financial Systems TABLE 1 Effects of financial systems on capital accumulations, 1990-1998 ---------------------------------------------------------------------------------------------------------- Dependent variables ----------------------------------------------------------------------- Independent variables Capital-labor Investment Investment Ratio Ratio ??? per- worker ------------------------------------------------------------------------------------------------------------------------- Constant 10.225** 0.088** -3148** (511.8) (8.40) (-6.81) Financial structure 0.037 0.021** 231.1 (1.31) (3.77) (1.18) Financial development 0.169** -0.007 220.6 (5.82) (-1.24) (1.10) Gross profit rate 0.001** (5.31) GDP per worker 0.316** (19.46) R2 0.99 0.54 0.97 F-test on equation 822.5** 9.04** 318.6** Hausman test 15.32** 21.9** 15.7** Countries 40 40 40 Observations 360 360 360 ------------------------------------------------------------------------------------------------------------------------- Notes: *significant at the 0.05 level, ** significant at the 0.01 level. t-values are in the brackets. ?Capital-labor ratio= Physical capital stock divided by labor, Investment per worker= Investment divided by labor, Investment ratio= Investment per worker divided by Capital-labor ratio, Profit rate of capital= Profit divided by physical capital stock, Labor productivity= log of GDP divided by labor, Financial structure= Stock market value traded as a percentage of GDP?divided by?the sum of credit to the private sector as a percentage of GDP, Financial development= Sum of credit to the private sector as a percentage of GDP and stock market value traded as a percentage of GDP11. TABLE 2 Effects of financial systems on profit rate of capital, 1990-1998 ---------------------------------------------------------------------------------------------------------------- Dependent variables ---------------------------------------- Independent variables Gross profit rate --------------------------------------------------------------------------------------------------- Constant 314.2** ????????????????????? (18.89) Financial structure 1.23 (0.921) Financial development 2.93** (2.11) Capital-labor ratio -25.91** (-15.97) R2 0.79 F-test on equation 89.4** Hausman test*** 1.60 Countries 40 Observations 360 ------------------------------------------------------------------------------------------------------------------------- Notes: *significant at the 0.05 level, ** significant at the 0.01 level. *** Since Hasusman test results for the random effects being uncorrelated with the explanatory variables are not rejected, random effects model results are reported in this table.t-values are in the brackets?Capital-labor ratio= Physical capital stock divided labor, Profit rate of capital= Profit divided by physical capital stock, Financial structure= Stock market value traded as a percentage of GDP divided by?the sum of credit to the private sector as a percentage of GDP, Financial development= sum of credit to the private sector as a percentage of GDP and stock market value traded as a percentage of GDP12. TABLE 3 Effects of financial systems on total productivity, 1990-1998 ---------------------------------------------------------------------------------------------------------- Dependent variable: labor productivity ---------------------------------------------------------------------- Independent variables Case (1) Case (2) ------------------------------------------------------------------------------------------------------------------------- Constant 4.13** 4.36** ??????????????????? (16.34) (97.59) Financial structure 0.038** -0.033 (3.06) (-0.52) Financial development -0.001 0.022 (-0.05) (0.338) Capital-labor ratio 0.572** (23.14) R2 0.99 0.96 F-test on equation 2190** 215.6** Hausman test 15.31** 11.15** Countries 40 40 Observations 360 360 ------------------------------------------------------------------------------------------------------------------------- Notes: *significant at the 0.05 level, ** significant at the 0.01 level.t-values are in the brackets. Capital-labor ratio= Physical capital stock divided by labor, Labor productivity= log of GDP divided by labor, Financial structure= Stock market value traded as a percentage of GDP divided by?the sum of credit to the private sector as a percentage of GDP, Financial development= the sum of credit to the private sector as a percentage of GDP and stock market value traded as a percentage of GDP13. Table 4 Correlations, panel data 1990-1998 ( Economic performance correlated to Financial development) -------------------------------------------------------------------------------------------------------- ------------ Capital Invest. Invest./ profit Labor Bank Stock Financial Labor ratio worker rate produ credit market structure -------------------------------------------------------------------------------------------------------------------- Investment ratio ? -0.031 1 Investment/ worker 0.961 0.183 1 ? Profit rate of capital -0.702 0.067 -0.655 1 Labor productivity 0.948 -0.011? 0.934?-0.646 ? 1? ?? Bank credit 0.637 0.059 0.635 -0.466 0.558 1 Stock market 0.363 0.171 0.405 -0.274 0.340 0.526 1 Financial structure 0.176 0.192? 0.211 -0.239 0.172 0.043 0.687 1 Financial develop. 0.606 ?0.114 0.623 ?-0.447 0.541 0.933 0.796 ?0.321 Note: Capital-labor ratio= Physical capital stock divided by labor, Investment per worker= Investment divided by labor, Investment ratio= Investment per worker divided by Capital-labor ratio, Profit rate of capital= Profit divided by physical capital stock, Labor productivity= log of GDP divided by labor, Bank credit= credit by deposit money banks to the private sector divided by GDP. Stock market = Stock market total value divided by GDP. Financial structure= Stock market value traded as a percentage of GDP divided by the sum of credit to the private sector as a percentage of GDP, Financial development= the sum of credit to the private sector as a percentage of GDP and stock market value traded as a percentage of GDP14. Chapter 7 The theory of Allen and Gale Franklin Allen and Douglas Gale have written more in favor of the market system, considering this system to be the best. But to adapt this system in countries which are not equipped enough to deal with market system, a more simplified version of the market system would be needed. It is the financial system which differentiates the developed nations from the developing nations, thus creating further structural differences between the two. It has been prophesized that the fast pace of financial innovation would push countries with bank based system, like Japan and France, towards a more market based system. Allen and Gale have in innumerous papers written about the inclination of economies towards a market based financial system. They have starkly differentiated between the German and the US models. The authors have essentially focused on issues of risk sharing and information. In underdeveloped or the developing nations, market based system has a disadvantage. But Allen and Gale compare the efficiency of the two systems vis-a-vis the development quotient of a country. It is most important for the financial system to be efficient enough to share risk, provide information, and allocate resources. The differences between the U.S. and German systems could be pointed out by focusing on the fact that German banks take short term deposits and convert them into holdings of corporate securities, whereas U.S. banks leave the investment in corporate securities to other institutions and convert short term deposits into mortgages, loans for consumer durables, and business loans. The assets held by German banks are therefore, fundamentally more risky than those held by the U.S. Commercial banks. The risk sharing might continue from the present generation to the future generations in the German model but it isn’t the case in the U.S model 15. The U.S Financial systems cannot provide intergenerational risk sharing because markets are incomplete. Current investors cannot trade with future generations of investors before uncertainty is resolved. The German model is characterized by a lack of competition between banks and is not constrained by competition from financial markets, may be able to over-come the liquidity constraint and the problems associated with writing individualized contracts16. The U.S. financial system provides many cross-sectional risk sharing opportunities because of the diversity of instruments and markets. In Germany, investors have very restricted opportunities to share risk in cross section manner. Most invest in bank accounts. Allen and Gale suggest there is a risk sharing trade-off in deciding on the structure of a financial system. The need for generations to be of a homogenous character is necessary to reduce the possibility of cross-sectional risk sharing and there is no cost to adopting the German model which allows intergenerational risk sharing. If the generations are heterogeneous, the benefits from cross-sectional risk sharing outweigh the benefits from intergenerational risk sharing; therefore, the U.S. Model would be preferable17. It is a widely known fact that the stock prices are very volatile is U.S. The arrival of new information for pay-off stream is the traditional reason that is given. The German and American system differs a lot when it comes to the information that is given out to the public. It is noted that in countries with bank based system most companies are not publicly listed, with minimum disclosure requirements. Despite volatility of the U.S market, the secrecy of bank based systems is not appreciated by the public usually. But volatility might result in making the German system more advantageous with their financial noise. The authors have also written about how the German branches are more sought after and effective compared to U.S commercial branches. Since banks operate in Public Interest, they are more of rent seeking institutions than profit or value maximizing firm18. The empirical analysis collected from varied surveys has proved that ‘while banks may be able to contribute long- term growth, their influence is, at best, a small fraction of that of the stock markets. Specifically, both stock markets and banks seem to have made important contributions to economic performance, although contribution of banking system is less than market-based system.’ Often findings have been found to be inconsistent with the ‘view that bank-based financial systems may be more able to promote long-term growth than market-based systems. In other words, our results support the view that both systems are important for the economic development’ 19. Chapter 8 Conclusion Most firms in bank based systems are at a disadvantage because they are not well quipped to make entry and investment decisions because the firm would usually lack the vast information that is available with the investors in the market based financial system. Lack of an active stock market would always work as a disadvantage. ‘The financial structure does not matter for real economic performance while financial development does matter for high capital labor ratio and profit rate of capital. Financial development is important for capital labor ratio and high capital labor ratio brings about high GDP per capita. To this development path, financial structure does not affect in most cases. For investment function, financial structure seems to have a positive effect. Perhaps it may be a short run effect because stock price encourage the investment ratio during the high stock price period.20’ The studies of Allen and Gale is very vast and they have time and again concluded in their works and articles that most bank based financial system is suited for countries and economies with more conventional form of industries as there is consensus on operating requirements, and financial market based systems are more suited to dynamic industries where there is not wide agreement. Markets are always not the best institutions as they impose constraints like equilibrium conditions that must be satisfied. And similarly banks have their own set of disadvantages. There is a need to look into the country’s economy and determine the desired financial system21. References 1) Demirguc-Kunt, Financial Structure and economic growth, (Cambridge), MIT Press, 2001. 2) Irena Grosfeld, Comparing Financial Systems, (Paris), Center for Social & Economic Research, 1994. 3) Levine, Ross. Bank-based Or Market-based Financial Systems: Which is better?, Journal of Financial Intermediation, 2002, v11 (4, Oct), 398-428. 4) Norman Lowe, Mastering Modern World History, Macmillan, 2004. 5) Manish Sharma, Bank Centered Versus Market based Financial System, (Tokyo), Chuo University. 6) R.C Merton, The Financial System and Economic Performance, Journal of Financial Survey Research, 1990. 7) Colin Mayer, Financial Systems, Corporate Finance, and Economic Development, R. Glenn Hubbard, National Bureau of Economic Research. 8) Demirguc-Kunt and Ross Levine, Bank Based and Market Based Financial Systems: Cross Country Comparisons, 2001. 9) Franklin Allen and Anthony .M. Santomero, What do Financial Intermediaries do?, 1990. 10) R Levine, Bank Based or Market Based Financial System: Which is better? ,Journal of Economics, 2000. 11) R.H Shmidt, Comparing the German and French Financial Systems, 1997. 12) A. Singh and J. Hamid, Corporate Financial Structure in Developing countries , 2011. 13) Prasanna Chandra, Financial Management (Theory and Practice), 1993. 14) Franklin Allen and Doughlas Gale, A Welfare Comparison of the German and U.S Financial System , 1994. 15) Reinhard.H.Schmidt, Andreas Hackethal, Marcel Tyrell. Disintermediation and the Role of Banks : An internal Comparison, January 1998. 16) O.E Ergungor. Markets VS Bank based systems : The Question of investor rights. 2004. 17) A.Azeez. Financial Systems and Economic Performance: A cross country analysis. University of Colombo, Sri Lanka . 2000. 18) Philip R. Wood,Set-Off and Netting, Derivatives, Clearing System.2nd ed (Sweet & Maxwell Ltd, June 2007)  Read More