Bank Profitability: Good for Growth?

Paul-Olivier Klein and Laurent Weill
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Paul-Olivier Klein: LaRGE Research Center, Université de Strasbourg

Working Papers of LaRGE Research Center from Laboratoire de Recherche en Gestion et Economie (LaRGE), Université de Strasbourg

Abstract: The aim of this paper is to provide the first investigation of the impact of bank profitability on economic growth. While bank profitability can be pro-growth by fostering financial stability, it can also result from lower competition which reduce access to credit and diminish economic growth. We analyze the impact of bank profitability on economic growth using a sample of 133 countries for the period 1999-2013. Our findings support the view that bank profitability fosters economic growth. Additional tests confirm the robustness of this conclusion. Thus, measures that favor bank profitability are growth-enhancing.

Keywords: bank profitability; financial development; economic growth; finance-growth nexus. (search for similar items in EconPapers)
JEL-codes: G21 O16 O40 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-ban
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:lar:wpaper:2017-02

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