How The Different Financial Systems Influence The Economies’ Recovery From Financial Crisis

Since the financial crisis happened in the year2007, the world is still influenced by the crisis even till now. This crisis almost has the largest and widest impact on the world ever. Nowadays, economists and politest worldwide have changed their concerns from how to cope with the crisis to how to fuel the recovery and reconstruction of the economy. However, one can observe quite different results when comparing the economic recovery of European continent countries and the United States. All data indicate that the United States has regained its growth from2010after two years recession, but in contrast, the European economics is still under huge stress and stuck in the euro debt crisis.In the macro-economic background of financial crisis, this paper analyzes another important difference between the United States and the European continent countries: financial system. As the two most important economies in the world, the United States and the European Continents represent two different types of financial systems. The United States depends more on the capital market while European countries relies much heavier on bank debts.Hence, this paper combines the two differences of the economic recovery after financial crisis and the type of financial system of the United States and Europe countries. Through analysis based on the macroeconomic theories and much empirical research, this paper finds out that one of the very important reasons that the United States can recover the economic growth more quickly is that the market-based financial system can develop much more advantages during the financial crisis. Compared to the bank-based financial system, market-based financial system help to reduce the system risk in the crisis. And more diverse financing methods can compensate each other and support the capital, which is essential for the economic activities.