This study examines whether economic development reshapes financial structure in line with the predictions of New Structural Financial Economics (NSFE). The theory argues that financial systems evolve endogenously alongside changes in industrial structure and financing needs, gradually shifting from bank-based to more market-oriented arrangements as economies develop. Using a panel of BRICS economies over the period 1998–2024, this paper analyzes how economic development and financial structure are related over the long run. A composite financial structure index is constructed through Principal Component Analysis based on financial structure size and activity indicators. Before estimation, cross-sectional dependence, slope heterogeneity, panel unit roots, and panel cointegration are systematically examined to ensure the validity of the empirical analysis. The Group-Mean Fully Modified Ordinary Least Squares (GM-FMOLS) estimator is applied to estimate the long-run coefficients, while the Augmented Mean Group (AMG) estimator serves as a robustness check. The empirical results reveal a positive and statistically significant effect of real GDP per capita on financial structure across alternative model specifications. The findings provide robust empirical support for the New Structural Economics framework and suggest that financial systems evolve in line with structural transformation and the dynamic financing needs of the real economy, while institutional quality variables and pandemic conditions are controlled throughout the analysis consistently.
Ahmadi Hajiabadi, S. R. (2026). Does Economic Development Reshape Financial Structure? Evidence from BRICS Economies. Iranian Journal of Economic Studies, (), -. doi: 10.22099/ijes.2026.56508.2132
MLA
Ahmadi Hajiabadi, S. R. . "Does Economic Development Reshape Financial Structure? Evidence from BRICS Economies", Iranian Journal of Economic Studies, , , 2026, -. doi: 10.22099/ijes.2026.56508.2132
HARVARD
Ahmadi Hajiabadi, S. R. (2026). 'Does Economic Development Reshape Financial Structure? Evidence from BRICS Economies', Iranian Journal of Economic Studies, (), pp. -. doi: 10.22099/ijes.2026.56508.2132
CHICAGO
S. R. Ahmadi Hajiabadi, "Does Economic Development Reshape Financial Structure? Evidence from BRICS Economies," Iranian Journal of Economic Studies, (2026): -, doi: 10.22099/ijes.2026.56508.2132
VANCOUVER
Ahmadi Hajiabadi, S. R. Does Economic Development Reshape Financial Structure? Evidence from BRICS Economies. Iranian Journal of Economic Studies, 2026; (): -. doi: 10.22099/ijes.2026.56508.2132
)