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How institutions and regulation shape the influence of bank concentration on economic growth: International evidence

Ana I. Fernández, Francisco González and Nuria Suárez

International Review of Law and Economics, 2010, vol. 30, issue 1, 28-36

Abstract: This paper analyzes how the effect of bank concentration on economic growth varies across countries depending on bank regulation, supervision, and institutions. Results for 84 countries over the 1980-2004 period indicate that bank concentration generally has a negative effect on economic growth, an effect that disappears in countries with poorer-quality institutional environments. This result is consistent with the idea that bank concentration contributes more to the development of lending relationships with borrowers in countries where the poor quality of institutions impedes market development. Tighter restrictions on bank activities also reduce the negative influence of bank concentration on economic growth. More market monitoring, however, is associated with a stronger negative influence of bank concentration on economic growth.

Keywords: Bank; concentration; Institutions; Bank; regulation; Bank; supervision; Economic; growth (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (6)

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International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

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