Introduction

The evolution of countries' financial systems worldwide depends on their economic history, legal and institutional framework (Neave, 2009). Historically, the first banks appeared in the early Middle Ages. The emergence of banks was linked to trade in Italian cities and towns in Western Europe. Banks mainly performed exchange and credit operations, while the foundations of modern banking were established only in the 19th century. The first securities were traded on the informal market. With the establishment of the Amsterdam Stock Exchange in the 16th century, the development of the formal securities market began.

Depending on who has the leading role in financing companies in developed market economies, there are two models of the financial system: market-based (market-based) and bank-oriented (bank-based) financial system. This traditional approach to classifying financial systems is the classical dichotomy (Veysov & Stolbov, 2012). Thus, for example, the securities market in Japan is more developed than in Germany and France, although all three countries are considered to have bank-oriented financial systems.

Financial systems in which the securities market plays a dominant role in financing economic activity are considered market-oriented. There is a decisive role for non-banking financial institutions in these financial systems. Institutional investors (investment funds, pension funds, and insurance companies) mobilize savings and place the collected funds in securities on the financial market. On the other hand, bank-oriented financial systems are those in whose structure banks play a dominant role, and securities trading is less important. In other words, the connection of entities with surplus and deficit of financial resources is achieved mainly through the banking sector.

Typical examples of bank-oriented financial systems are the financial systems of Germany and Japan. At the same time, the United States and the United Kingdom are synonymous with a market-oriented financial system. Based on the review of the relative importance of banks and the securities market, it is possible to notice that the USA and Germany are practically extreme cases. Banks are relatively less significant in the USA, with a share of 92.1 percent in GDP, over two-thirds less than in Germany (311 percent). On the other hand, the share of market capitalization in GDP, which amounts to 114.9 percent in the USA, is almost three times higher than the same indicator in Germany (43.4 percent).

In recent decades, the gap between the two financial systems has narrowed. Domination is gradually being taken over by a system based on the capital market, while banking institutions are increasingly fitting into the mechanisms of the securities market.

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