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Convergence of financial systems: towards an evolutionary perspective

Published online by Cambridge University Press:  18 April 2006

WERNER HÖLZL
WERNER HÖLZL
Affiliation:
Austrian Institute of Economic Research (WIFO), PO Box 91, A-1103 Vienna. Tel: (+43 1) 798 26-472. Fax: (-43 1) 798 93 86. Email: werner.hoelzl@wifo.ac.at
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Abstract

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This paper provides an evolutionary perspective on financial systems based on complex systems theory. This perspective is used to organize the discussion about the convergence and non-convergence of financial systems. Based on a notion of financial systems as configuration of complementary elements, it is suggested that the convergence of financial systems is best conceptualized as a path-dependent process of institutional change and innovation. The implication of the evolutionary perspective on the dynamics of financial systems is that neither convergence theories using a simple evolutionary argument of survival of the fittest nor divergence theories related to strong complementarities can provide much guidance for analyzing institutional transformations of financial systems.

Type
Research Article
Information
Journal of Institutional Economics , Volume 2 , Issue 1 , April 2006 , pp. 67 - 90
Copyright
2006 The JOIE Foundation

Footnotes

I thank Astrid Nolte, Andreas Reinstaller and Engelbert Stockhammer, two anonymous reviewers of this journal and Geoff Hodgson, the editor, for their helpful comments and suggestions. The ususal caveats apply.