Framing Market-Based Banking and the Financial Crisis

This chapter considers market-based banking in more empirical depth across eleven countries. It argues that levels of market-based banking are now a more useful way to compare national banking systems and serve, when combined with a focus on other market sources of non-financial corporation (NFC) financing, to provide an alternative to the standard dichotomy of bank-based and market-based financial systems. The chapter considers the degree of market-based assets and liabilities in banks in the eleven banking systems and highlights the differences between systems. It demonstrates how this detail helps explain the differential impact of the financial crisis in terms of timing, the required levels of government support to banking systems, and the impact of the crisis on lending to NFCs.