Banking competition, financial dependence and economic growth

Joaquin Maudos () and Juan Fernandez de Guevara
Authors registered in the RePEc Author Service: Juan Fernández-de-Guevara ()

MPRA Paper from University Library of Munich, Germany

Abstract: The aim of this paper is to analyse the effect of financial development and banking competition on economic growth using both structural measures of competition (market concentration) and measures based on the new empirical industrial organization perspective (Panzar and Rosse`s test and the Lerner index). The evidence obtained in the period 1993-2003 for a sample of 53 sectors in 21 countries indicates that financial development and the exercise of bank market power promote economic growth. The latter result is consistent with the literature on relationship lending which argues that bank competition can have a negative effect on the availability of finance for companies that are informationally more opaque. The results cast doubt on the use of market concentration measures as indicators of competition.

Keywords: economic growth; financial development; bank competition (search for similar items in EconPapers)
JEL-codes: D40 G21 L11 (search for similar items in EconPapers)
Date: 2006, Revised 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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