Regional Financial Development and Bank Competition: Effects on Firms' Growth

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

MPRA Paper from University Library of Munich, Germany

Abstract: This paper analyzes the effect of regional financial development and bank competition on firms’ growth using the Spanish provinces as a testing ground. Our results show that firms in industries with a greater dependence on external finance grow faster in more financially developed provinces. The results also show that bank monopoly power has an inverted-U effect on firms’ growth, suggesting that market power has its highest effect at intermediate values. The effect is heterogeneous among firms according to the financial dependence of the industry they belong to. This result is consistent with the literature on relationship banking which argues that bank competition can have a negative effect on the availability of finance for more informationally opaque firms.

Keywords: economic growth; regional financial development; bank competition (search for similar items in EconPapers)
JEL-codes: D40 G21 L11 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-ban, nep-com, nep-cse, nep-fdg, nep-geo and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published in Regional Studies 2.43(2009): pp. 211-228

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Journal Article: Regional Financial Development and Bank Competition: Effects on Firms' Growth (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:15256

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