The Survey of the Causal Relationship between Banking Concentration and Economic Growth

Abdolrasool Ghasemi () and Fatemeh Abdolshah
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Abdolrasool Ghasemi: Department of Economics, University of Allameh Tabatabai, Tehran, Iran.
Fatemeh Abdolshah: Department of Economics, University of Allameh Tabatabai, Tehran, Iran.

Iranian Economic Review (IER), 2014, vol. 18, issue 3, 87-101

Abstract: This paper examines the causality between concentration in banking industry and economic growth by using data across 15 countries named in "Iran outlook in 2025", over the period 2004-2011. Our aim is to assess whether the economy grows more or less rapidly in areas where the banking sector is more concentrated. The topic is motivated by the fact that the causality between concentration in banking industry and economic growth has not been examined in Iran and the countries named in Iran Outlook 2025. In order to investigate the relationship, the standard Granger causality test and Hsiao’s version of Granger causality test are employed in this paper. The results show that banking concentration is negatively associated with economic growth. Besides, the evidence suggests that economic growth has a positive effect on bank monopoly power.

Keywords: Banking Structure; Economic Growth; Countries of Iran’s Prospective District (search for similar items in EconPapers)
Date: 2014
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Persistent link: https://EconPapers.repec.org/RePEc:eut:journl:v:18:y:2014:i:3:p:87

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