Bank-based versus market-based financial systems: a critique of the dichotomy

The paper sets out different perspectives on the bank-based vs market-based typology of financial systems. It presents a general critique of the typology, paying particular attention to the ways in which the typology reflects a loanable funds approach, ignoring the roles of banks in the credit money creation process, and the neglect of different types of banks. It is argued that banks should be viewed as institutions engaged in market transactions and the equity markets as also institutions involved in markets.