Banking Systems and Their Effects on Regional Wealth and Inequality

45 Pages Posted: 13 May 2019 Last revised: 5 May 2021

See all articles by Hans-Peter Burghof

Hans-Peter Burghof

University of Hohenheim

Marcel Gehrung

University of Hohenheim

Daniel Schmidt

University of Hohenheim

Date Written: May 5, 2021

Abstract

Our paper examines how the characteristics of banking systems impact regional economies. We analyse a new and unique data set consisting of bank balance sheet information of banks in five European countries combined with their legal forms, and with regional economic data on NUTS 2 levels. It is demonstrated that the presence of headquarters of co-operative banks as well as public savings banks and private banks in the respective region has a positive impact on economic wealth and reduces income inequality. Furthermore, regional banking systems consisting of smaller banks have positive effects on the local economy. Finally, we find that banks with a higher ratio of equity to total assets go along with higher wealth and reduce inequality significantly. Our work shows that diverse regional banking systems have a manifold positive influence on local economies.

Keywords: Banking Systems, Small Banks, Inequality, Wealth, Co-operative Banks, Savings Banks, Regions

JEL Classification: P34, P43, G15, G21

Suggested Citation

Burghof, Hans-Peter and Gehrung, Marcel and Schmidt, Daniel, Banking Systems and Their Effects on Regional Wealth and Inequality (May 5, 2021). Available at SSRN: https://ssrn.com/abstract=3380669 or http://dx.doi.org/10.2139/ssrn.3380669

Hans-Peter Burghof

University of Hohenheim ( email )

Schloss Hohenheim
510F
Stuttgart, 70599
Germany
+49 711 459 22900 (Phone)
+49 711 459 23448 (Fax)

Marcel Gehrung

University of Hohenheim ( email )

Germany

HOME PAGE: http://https://bank.uni-hohenheim.de/126374

Daniel Schmidt (Contact Author)

University of Hohenheim ( email )

Germany
004971145922756 (Phone)
004971145923448 (Fax)

HOME PAGE: http://https://bank.uni-hohenheim.de/

Do you want regular updates from SSRN on Twitter?

Paper statistics

Downloads
226
Abstract Views
1,211
rank
184,574
PlumX Metrics