Bank efficiency and regional growth in Europe: new evidence from micro-data

Ansgar Belke, Ralph Setzer and Ulrich Haskamp ()

No 1983, Working Paper Series from European Central Bank

Abstract: This paper examines whether European regions which incorporate banks with a higher intermediation quality grow faster and are more resilient to negative shocks than its less efficient peers. For this purpose, we measure a bank's intermediation quality by estimating its pro t and cost efficiency while taking the changing banking environment after the financial crisis into account. Next, we aggregate the efficiencies of all banks within a NUTS 2 region to obtain a regional proxy for fi nancial quality in twelve European countries. Our results show that relatively more pro t efficient banks foster growth in their region. The link between fi nancial quality and growth is valid both in the pre-crisis and post-crisis period. These results provide evidence to the importance of swiftly restoring bank pro tability in euro area crisis countries through addressing high non-performing loans ratios and decisive actions on bank recapitalization. JEL Classification: G21, O16, O47, O52

Keywords: bank efficiency; Europe; financial development; regional growth (search for similar items in EconPapers)
Date: 2016-11
New Economics Papers: this item is included in nep-ban, nep-eec, nep-eff and nep-ure
Note: 1128184
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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