The Depth of the Financial System: A Comparison of Developed and Less Developed Countries

Abstract

This paper summarizes the arguments and counterarguments within the scientific discussion on the issue of how countries’ income levels are related to the depth of their financial system. The main purpose of the research is to determine whether high-income countries have deeper financial systems when compared to other countries. We also examine whether high-income OECD member countries have a deeper financial system when compared to high-income non-OECD member countries. Our contribution is threefold: First, our study has a wider scope than most of the previous studies (i.e. 203 countries in total). Second, we examine both the impact of OECD membership and the actual income level on “depth”. depthdepth