 Granularity in banking and growth: Does financial openness matter?Franziska Bremus and Claudia Buch Journal of Banking & Finance, 2017, vol. 77, issue C, 300-316 Abstract: We explore the impact of large banks and of financial openness for aggregate growth. Large banks matter because of granular effects: if markets are very concentrated in terms of the size distribution of banks, idiosyncratic shocks at the bank-level do not cancel out in the aggregate but can affect macroeconomic outcomes. Financial openness may affect GDP growth in and of itself, and it may also influence concentration in banking and thus the impact of bank-specific shocks for the aggregate economy. To test these relationships, we use different measures of de jure and de facto financial openness in a panel dataset for 79 countries and the years 1996–2009. Our research has three main findings: First, bank-level shocks significantly impact upon GDP. Second, financial openness tends to lower GDP growth. Third, granular effects tend to be stronger in financially closed economies. Keywords: Bank market structure; Financial openness; Granular effects; Growth (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:77:y:2017:i:c:p:300-316 DOI: 10.1016/j.jbankfin.2016.04.023 Access Statistics for this article Journal of Banking & Finance is currently edited by Ike Mathur More articles in Journal of Banking & Finance from Elsevier |
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