Bank Competition, Financial Dependence, and Economic Growth in the Gulf Cooperation Council

33 Pages Posted: 19 Jul 2016

See all articles by Giovanni Caggiano

Giovanni Caggiano

Department of Economics, Monash University; University of Padova

Pietro Calice

World Bank

Date Written: May 31, 2016

Abstract

The relationship between bank competition, firm access to finance, and economic growth is a much debated topic in the economic literature and in policy circles. This paper uses a panel of 23 manufacturing sectors over 2002-10 to investigate the impact of bank competition on industry growth in the Gulf Cooperation Council economies. The results show that greater competition allows financially dependent firms to grow faster. In addition, the results show that lower restrictions on banks? permissible activities, better credit information, and greater institutional effectiveness mitigate the damaging impact of low competition. These results are robust to a variety of checks. The findings suggest that improving bank competition should be an important aspect of the financial sector development agenda in the Gulf Cooperation Council.

Keywords: Debt Markets, Banks & Banking Reform, Access to Finance, Labor Policies, Emerging Markets

Suggested Citation

Caggiano, Giovanni and Calice, Pietro, Bank Competition, Financial Dependence, and Economic Growth in the Gulf Cooperation Council (May 31, 2016). World Bank Policy Research Working Paper No. 7687, Available at SSRN: https://ssrn.com/abstract=2811334

Giovanni Caggiano (Contact Author)

Department of Economics, Monash University ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia

HOME PAGE: http://https://sites.google.com/site/giovannicaggiano72/CV/home

University of Padova ( email )

Via 8 Febbraio, 2
Padova, Vicenza 35122
Italy

Pietro Calice

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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