The effect of Bank Concentration on Entrepreneurship in Central and Eastern European Transition Countries_x0003_

Claudia Capozza and Angela Bergantino

ERSA conference papers from European Regional Science Association

Abstract: Using data from 2000 to 2007, we investigate the effect of bank concentration on the entrepreneurial initiative in the Central and Eastern European transition countries for eight industrial sectors. We set up a simple structural model by which we test the relationship between banking market structure and firm creation. First, we estimate the model on the whole sample, to test the general effect; then, we restrict the analysis to the high-technology-intensive sectors to verify the specific impact of banking market structure on industries which are, usually, more in need of external finance. Our results provide evidence of a non monotonic relationship: bank concentration promotes entrepreneurship; however, an excessive level of concentration becomes harmful. Moreover, the positive effect of concentration decreases for high-technology-intensive sectors. Entrepreneurship is also favoured by well-developed financial markets, perceived quality of the institutional environment, policies to prevent corruption and effective property rights protection.

Keywords: Bank concentration; transition economies; firm creation (search for similar items in EconPapers)
JEL-codes: E44 G20 O16 P20 P34 (search for similar items in EconPapers)
Date: 2013-11
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:wiw:wiwrsa:ersa13p1049

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