Are Product Market Structures Affected by Banking Concentration: Evidence from Transition Countries

Fabrizio Coricelli and Mojca Marc

Chapter 3 in Money, Banking and Financial Markets in Central and Eastern Europe, 2010, pp 32-61 from Palgrave Macmillan

Abstract: Abstract There is growing empirical literature on the relationship between concentration in product markets and concentration in the banking sector. Cetorelli (2001, 2004) and Cetorelli and Strahan (2006) found that countries or regions with more concentrated banking sectors tend also to have more concentrated product markets, thus suggesting that the causality goes from concentration in the banking sector to concentration in product markets. These results emphasise the negative effect of banking concentration on competition in product markets and hence on efficiency and even economic growth. Similarly, Pagano (1993) provides a theoretical model and empirical evidence of an adverse effect of banking market concentration on economic growth. However, such results do not appear robust, either at the theoretical level or at the empirical level. For instance, Petersen and Rajan (1995) build a theoretical model in which banks with market power are more willing to finance young firms. They also find empirical support for such an effect. Furthermore, Hellman and DaRin (2002) propose a theory and empirical evidence showing that more concentrated banking sectors promote the development of new sectors and thus act as catalysts for industrialisation. In this paper we investigate whether the differences in the results obtained in the literature may result from the focus on different country groupings and different periods of time.

Keywords: European Union; Banking Sector; Benchmark Model; Advanced Country; Transition Country (search for similar items in EconPapers)
Date: 2010
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Working Paper: Are product market structures affected by banking concentration: Evidence from transition countries (2010)
Working Paper: Are product market structures affected by banking concentration: Evidence from transition countries (2010)
Working Paper: Are product market structures affected by banking concentration: Evidence from transition countries (2010)
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:pal:pmschp:978-0-230-30221-1_3

Ordering information: This item can be ordered from
http://www.palgrave.com/9780230302211

DOI: 10.1057/9780230302211_3

Access Statistics for this chapter

More chapters in Palgrave Macmillan Studies in Banking and Financial Institutions from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().