Bank profitability and economic growth

Paul-Olivier Klein and Laurent Weill

The Quarterly Review of Economics and Finance, 2022, vol. 84, issue C, 183-199

Abstract: Is bank profitability beneficial to economic growth? While policymakers have shown major concerns for low levels of bank profitability, the influence of bank profitability on economic growth remains an open question. While it can favor economic growth by strengthening financial stability, it can also result from lower competition and as such depress economic growth. We provide the first empirical investigation that assesses the impact of bank profitability on economic growth. We examine a panel of 132 countries during the period 1999−2013 using generalized method of moments (GMM) dynamic panel techniques. We document a positive impact of bank profitability on economic growth in both the short-run and the long-run. These findings are robust to controlling for the dynamics of banks’ profits. They are also robust to alternative measures, specifications, and time periods.

Keywords: Bank profitability; Economic growth; Finance-growth nexus (search for similar items in EconPapers)
JEL-codes: G21 O16 O40 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1062976922000175
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Bank Profitability and Economic Growth (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:84:y:2022:i:c:p:183-199

DOI: 10.1016/j.qref.2022.01.009

Access Statistics for this article

The Quarterly Review of Economics and Finance is currently edited by R. J. Arnould and J. E. Finnerty

More articles in The Quarterly Review of Economics and Finance from Elsevier
Bibliographic data for series maintained by Catherine Liu ().