Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data
Federal Reserve Bank of New York
Morningstar Associates LLC
FRB of Chicago Working Paper No. 99-08
This paper explores the empirical relevance of banking market structure on growth. There is substantial evidence of a positive relationship between the level of development of the banking sector of an economy and its long-run output growth. Little is known, however, about the role played by the market structure of the banking sector on the dynamics of capital accumulation. This paper provides evidence that bank concentration promotes the growth of those industrial sectors that are more in need of external finance by facilitating credit access to younger firms. However, we also find evidence of a general depressing effect on growth associated with a concentrated banking industry, which impacts all sectors and all firms indiscriminately.
Note: Previous abstract URL: http://ssrn.com/abstract_id=254092 (now inactive)
Number of Pages in PDF File: 46working papers series
Date posted: May 24, 2002
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