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The granularity of the Brazilian banking market

Adriano Maia, Guilherme De Oliveira, Raul Matsushita and Sergio Da Silva ()

The North American Journal of Economics and Finance, 2021, vol. 58, issue C

Abstract: Bank size distributions concentrate in a few large banks – the big “grains.” This fact means idiosyncratic shocks at the bank level do not cancel out, thus affecting the business cycle. Here, we present evidence of granularity in the banking market using Brazilian data. We examine the explanatory power of the granular banking residual of the five largest banks on quarterly GDP changes from 2010 to 2019. We conservatively find that shocks to revenues of these top five banks explain nearly one-fifth of GDP fluctuations.

Keywords: Granularity; Banking market structure; Granular banking residual; Power law (search for similar items in EconPapers)
JEL-codes: E32 E44 G21 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.najef.2021.101545

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Handle: RePEc:eee:ecofin:v:58:y:2021:i:c:s1062940821001558