Abstract
This paper examines the
literatures that link between the financial designs and economic development.
The permissible scope of activities for banks and other financial
intermediaries, however, are determined by the regulation dictating the
structure of the banking industries, the financial products and services the
intermediaries offer and the information disclosure requirements in the
financial market. These aspects clarify
the exogenous instruments that can be used to influence financial system
design. These designs in return influence the choice of financing and the
capital structure of the firm. Different financial system designs will manifest
themselves in different divisions of activities between financial institutions
and markets. What are those types of
financial designs? Why do we care about
financial systems designs?
JEL classification: G21; G28;
Keywords: financial design; bank regulation; legal requirement;
Islamic banks; capital structure;
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