Financial Nexus

Abstract

This book chapter investigates the financial nexus generated by bank soundness, concentration, and efficiency in the banking sector, as well as the development of the capital markets. The selected databases includes the time period between 1997 and 2010 for a large sample of 63 developed and developing countries. The empirical findings suggested that bank performance has a high impact on the relation between soundness, structural and functional characteristics of the banking sector. The econometric framework is complex and the empirical results appear to be robust for various measures of the selected variables and for distinct estimation techniques.