This paper reviews and retests Atje-Jovanovic model, which is derived from Greenwood-Jovanovic model, to ensure that stock-market development has spurred the growth rate of economic growth more than bank development has done in Korea. The paper also r...
This paper reviews and retests Atje-Jovanovic model, which is derived from Greenwood-Jovanovic model, to ensure that stock-market development has spurred the growth rate of economic growth more than bank development has done in Korea. The paper also revises and tests the Atje-Jovanovic model to involve simultaneously the two major variables, bank intermediation activity and market intermediation activity to clarify the difference of contribution of the two variables towards economic growth. The former result shows market-oriented intermediation contributes more to the economic growth. The latter confirms it. The results suggest that Korean economy has to rely on the market-oriented intermediation more heavily for its future financial system.