Banking stability, competition, and economic volatility

Ana I. Fernández, Francisco González and Nuria Suárez

Journal of Financial Stability, 2016, vol. 22, issue C, 101-120

Abstract: The paper analyzes the influence of banking stability on the volatility of industrial value added using data for 110 countries. Our results confirm the relevance of lending and asset allocation effects because banking stability reduces the volatility of value added more in industries that have greater external financial dependence and intangible intensity when they are located in countries with more developed financial and institutional systems. Moreover, banking stability helps reduce economic volatility more in countries with less bank market competition. We control for recessions, reverse causality problems, and endogeneity of banking stability.

Keywords: Banking stability; Competition; Economic volatility; Regulations (search for similar items in EconPapers)
JEL-codes: G1 G2 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:22:y:2016:i:c:p:101-120

DOI: 10.1016/j.jfs.2016.01.005

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