First, the structure of the industry: In the world’s top 1000 banks, there are many more large and medium-sized domestic banks from the developed countries than from the emerging economies.
Financial systems which rely more on equity rather than debt finance can be conducive to growth, and they tend to be more resilient to shocks. This suggests that there might indeed be a “double dividend” – financial sector reforms that contribute to financial stability also promote growth. Viewed in this light, there are a couple of takeaways for policymakers and regulators.