Competition in the banking sector and economic growth: panel-based international evidence

Edoardo Gaffeo and Ronny Mazzocchi

No 2014/02, DEM Discussion Papers from Department of Economics and Management

Abstract: This paper employs panel techniques to empirically examine the link between the competitiveness of the banking sector and real economic growth, using data from a sample of OECD economies during 1997-2010. We employ a dynamic GMM model to find that an increase in the efficiency of banks driven by fiercer competition is robustly associated with higher real growth. The issue of Granger-causality is then explored by means of a panel- based testing procedure addressing heterogeneity. While there is a strong evidence of causality running from real growth to banking competitiveness, a bi-directional causality appears clearly only for lags higher than 1.

Keywords: Banking competition; Financial development; Economic growth (search for similar items in EconPapers)
JEL-codes: C33 G21 O16 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-ban, nep-eff and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:trn:utwpem:2014/02

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