Bank Competition, Financial Dependence, and Economic Growth in the Gulf Cooperation Council

The relationship between bank competition, firm access to finance, and economic growth is a much debated topic in the economic literature and in policy circles. This paper uses a panel of 23 manufacturing sectors over 2002-10 to investigate the imp...

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Bibliographic Details
Main Authors:	Caggiano, Giovanni, Calice, Pietro
Format:	Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2016
Subjects:	ACCESS TO CREDIT CREDIT MARKETS FOREIGN ENTRY CAPITAL MARKETS FINANCIAL SERVICES BORROWER STATE‐OWNED BANKS ECONOMIC GROWTH EXTERNAL FINANCING CREDIT ALLOCATION CAPITAL ACCUMULATION EXTERNAL FUNDS FINANCING FINANCIAL MANAGEMENT BANKING INDUSTRY INTEREST MORAL HAZARD INDUSTRY BIAS PRIVATE CREDIT AVAILABILITY OF CREDIT BANKING SYSTEM SERVICES PUBLIC SERVICES ACCESS TO EXTERNAL FINANCE BANKING SYSTEMS CAPITAL STRUCTURE CREDIT CONSTRAINTS DEFAULT RISK INFORMATION SHARING ECONOMIC POLICY SOURCES OF FINANCE BORROWERS BANK ASSETS GREATER ACCESS INTERNATIONAL BANK INFORMATION ASYMMETRIES CASH FLOWS BANK COMPETITION BANKING SECTOR BANK LENDING BANKING CRISES EXTERNAL FINANCE LACK OF CREDIT CREDIT ACCESS RETURN ON ASSETS FOREIGN BANKS ADVANCED ECONOMIES CREDIT BUREAUS LENDING DECISIONS CORPORATE FINANCE FINANCIAL SERVICES PROVIDERS FINANCIAL INSTITUTIONS MARKETS ENTRY BARRIERS ACCESS TO FINANCE ENTERPRISES FINANCIAL ACCESS BANK CREDIT REAL ESTATE FINANCE INFORMATION ASYMMETRY BANKS STATE‐ OWNED BANKS CREDIT INFORMATION CREDIT REGISTRIES CAPITAL RETAIL BANKING FINANCIAL STABILITY PUBLIC POLICIES VALUE BANK CREDIT ACCESSIBILITY EXPENDITURES CIVIL SERVICE GOVERNMENT INTERVENTION RISK OF BANK FAILURE DIVERSIFICATION SECURITIES SYSTEMIC INSTABILITY GOVERNANCE INSURANCE FINANCIAL DEVELOPMENT ECONOMIC DEVELOPMENT RETAINED EARNINGS INVESTMENT FINANCIAL INTERMEDIATION RISK CREDIT REGISTRY FINANCIAL MARKETS BANKING COOPERATION FINANCIAL SECTOR DEVELOPMENT REVENUE EARNINGS BORROWING LENDING CAPITAL EXPENDITURES ENTREPRENEURSHIP GOVERNMENTS BANK FAILURE FINANCIAL DEPTH INCOME GROUPS CREDIT MARKET COMPETITION EMPLOYEES
Online Access:	http://documents.worldbank.org/curated/en/2016/05/26419585/bank-competition-financial-dependence-economic-growth-gulf-cooperation-council http://hdl.handle.net/10986/24526

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Summary:	The relationship between bank competition, firm access to finance, and economic growth is a much debated topic in the economic literature and in policy circles. This paper uses a panel of 23 manufacturing sectors over 2002-10 to investigate the impact of bank competition on industry growth in the Gulf Cooperation Council economies. The results show that greater competition allows financially dependent firms to grow faster. In addition, the results show that lower restrictions on banks’ permissible activities, better credit information, and greater institutional effectiveness mitigate the damaging impact of low competition. These results are robust to a variety of checks. The findings suggest that improving bank competition should be an important aspect of the financial sector development agenda in the Gulf Cooperation Council.

Bank Competition, Financial Dependence, and Economic Growth in the Gulf Cooperation Council

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