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Big Banks and Macroeconomic Outcomes: Theory and Cross‐Country Evidence of Granularity

Franziska Bremus, Claudia M. Buch, Katheryn Russ () and Monika Schnitzer ()

Journal of Money, Credit and Banking, 2018, vol. 50, issue 8, 1785-1825

Abstract: Does the mere presence of big banks affect macroeconomic outcomes? We develop a theory of granularity for the banking sector by modeling heterogeneous banks charging variable markups. Using data for a large set of countries, we show that the banking sector is indeed “granular,” as the right tail of the bank size distribution follows a power law. We demonstrate empirically that the presence of big banks, measured by a high degree of market concentration, is associated with a positive and significant relationship between bank‐level credit growth and aggregate growth of credit or GDP.

Date: 2018
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https://doi.org/10.1111/jmcb.12545

Related works:
Working Paper: Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidence of Granularity (2013) Downloads
Working Paper: Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidence of Granularity (2013) Downloads
Working Paper: Big Banks and Macroeconomic Outcomes: Theory and Cross-Country Evidence of Granularity (2013) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:50:y:2018:i:8:p:1785-1825

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Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

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