Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data

Posted: 13 Sep 2001

See all articles by Nicola Cetorelli

Nicola Cetorelli

Federal Reserve Bank of New York

Michele Gambera

Morningstar Associates LLC

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Abstract

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.

JEL Classification: G2, L1, O1

Suggested Citation

Cetorelli, Nicola and Gambera, Michele, Banking Market Structure, Financial Dependence and Growth: International Evidence from Industry Data. Journal of Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=261342

Nicola Cetorelli (Contact Author)

Federal Reserve Bank of New York ( email )

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HOME PAGE: http://nyfedeconomists.org/cetorelli/

Michele Gambera

Morningstar Associates LLC ( email )

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Chicago, IL 60606
United States
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312-696-6001 (Fax)

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