Are Bigger Banks Better? Firm-Level Evidence from Germany

Kilian Huber

No 28767, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The effects of large banks on the real economy are theoretically ambiguous and politically controversial. I identify quasi-exogenous increases in bank size in postwar Germany. I show that firms did not grow faster after their relationship banks became bigger. In fact, opaque borrowers grew more slowly. The enlarged banks did not increase profits or efficiency, but worked with riskier borrowers. Bank managers benefited through higher salaries and media attention. The paper presents newly digitized microdata on German firms and their banks. Overall, the findings reveal that bigger banks do not always raise real growth and can actually harm some borrowers.

JEL-codes: E24 E44 G21 G28 L11 L25 N14 N24 N84 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-ban, nep-bec, nep-cfn, nep-his and nep-mac
Note: CF DAE EFG IO ME
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Published as Kilian Huber, 2021. "Are Bigger Banks Better? Firm-Level Evidence from Germany," Journal of Political Economy, vol 129(7), pages 2023-2066.

Downloads: (external link)
http://www.nber.org/papers/w28767.pdf (application/pdf)

Related works:
Journal Article: Are Bigger Banks Better? Firm-Level Evidence from Germany (2021)
Working Paper: Are Bigger Banks Better? Firm-Level Evidence from Germany (2021)
Working Paper: Are Bigger Banks Better? Firm-Level Evidence from Germany (2020)
Working Paper: Are bigger banks better? Firm-level evidence from Germany (2020)
Working Paper: Are Bigger Banks Better? Firm-Level Evidence from Germany (2020)
Working Paper: Are bigger banks better?: firm level evidence from Germany (2020)
Working Paper: Are bigger banks better? Firm-level evidence from Germany (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:28767

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w28767

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().