Banking market structure and industry growth in the Central-East Europe region

Angela Bergantino and Claudia Capozza ()
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Claudia Capozza: University of Bari “Aldo Moro”

Empirical Economics, 2018, vol. 54, issue 3, No 17, 1319-1333

Abstract: Abstract Using cross-country cross-industry data, this paper explores how industry’s growth in number of firms in Central-East Europe (CEE) region is influenced by bank concentration in both the pre-crisis and crisis periods. The CEE region shows highly concentrated banking markets and less-developed financial markets; thus, the level of bank concentration and the resulting credit supply are crucial for firm creation and survival. Despite this, there is little evidence on these countries in the literature. Our empirical results suggest an inverted-U relationship: industry growth is fostered by bank concentration, but there is a turning point from which higher concentration begins producing the opposite effect. Moreover, the positive impact has a greater intensity during the crisis period compared to the pre-crisis period. Between sectors’ analysis shows that high-tech sectors are less reactive to changes in the concentration level.

Keywords: Industry growth; Bank concentration; Transition economies; High-tech industries; Regional development (search for similar items in EconPapers)
JEL-codes: G20 O16 P20 P34 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s00181-017-1262-1

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