 Bank efficiency and industry growth during financial crisesEconomic Modelling, 2018, vol. 68, issue C, 11-22 Abstract: Financial crises pose many problems for growth, and in this time of increasing financial instability it is important to fully understand why this happens. Many papers have analyzed the relationship between growth and a country's level of financial development using private credit, which leads to several unexpected problems. However, very few have used bank efficiency to gauge the development of the financial sector. The aim of this paper is to analyze the effect of bank efficiency on value-added growth of industries that were most dependent on external financing during the financial crisis. Specifically, it uses the data envelopment analysis (DEA) method to measure the efficiency of the banking sector across countries, according to the empirical strategy offered by Rajan and Zingales (1998). Our main result shows that bank efficiency relaxed credit constraints and increased the growth rate for financially dependent industries during the crisis. This finding shows the great but overlooked importance of bank efficiency in mitigating the negative effects of financial crises on growth for industries that are most dependent on external financing. Keywords: Bank efficiency; Financial dependence; Growth; Financial friction; Banking crises (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:ecmode:v:68:y:2018:i:c:p:11-22 DOI: 10.1016/j.econmod.2017.03.011 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.