Financial Dependence, Banking Sector Competition, and Economic Growth

The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper the authors first estimate for 16 countries a measure of...

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Main Authors:	Claessens, Stijn, Laeven, Luc
Format:	Policy Research Working Paper
Language:	English
Published:	World Bank, Washington, DC 2012
Subjects:	ACCOUNTING ACCOUNTING PRACTICES ACCOUNTING STANDARDS ASSET RATIO ASSETS BANKING CONCENTRATION BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SYSTEM BANKING SYSTEMS BANKS BARRIERS TO ENTRY BENCHMARK CAPITAL MARKETS CAPITALIZATION COLLUSION COMMERCIAL BANKS COMPANY LAW COMPARATIVE ADVANTAGE COMPETITIVENESS CONSOLIDATION DEPOSITS DEREGULATION ECONOMIC GROWTH ELASTICITY EMERGING MARKETS EQUILIBRIUM EXPENDITURES EXTERNAL FINANCING FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS GDP GDP PER CAPITA GROWTH POTENTIAL GROWTH RATE INCOME INNOVATION INVESTMENT NEEDS LATIN AMERICAN LEGAL FRAMEWORK MARGINAL COSTS MARGINS MONEY MARKET MONOPOLISTIC COMPETITION OWNERSHIP STRUCTURE PERFECT COMPETITION POSITIVE EFFECTS PROPERTY RIGHTS PROXY PUBLIC ENTERPRISES RETURN ON ASSETS STOCK MARKET TOTAL REVENUE TRADE CREDIT TRADE FINANCE TRANSITION ECONOMIES VALUE ADDED
Online Access:	http://documents.worldbank.org/curated/en/2005/01/5588129/financial-dependence-banking-sector-competition-economic-growth http://hdl.handle.net/10986/8906

id	okr-10986-8906
recordtype	oai_dc
spelling	okr-10986-89062021-04-23T14:02:42Z Financial Dependence, Banking Sector Competition, and Economic Growth Claessens, Stijn Laeven, Luc ACCOUNTING ACCOUNTING PRACTICES ACCOUNTING STANDARDS ASSET RATIO ASSETS BANKING CONCENTRATION BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SYSTEM BANKING SYSTEMS BANKS BARRIERS TO ENTRY BENCHMARK CAPITAL MARKETS CAPITALIZATION COLLUSION COMMERCIAL BANKS COMPANY LAW COMPARATIVE ADVANTAGE COMPETITIVENESS CONSOLIDATION DEPOSITS DEREGULATION ECONOMIC GROWTH ELASTICITY EMERGING MARKETS EQUILIBRIUM EXPENDITURES EXTERNAL FINANCING FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS GDP GDP PER CAPITA GROWTH POTENTIAL GROWTH RATE INCOME INNOVATION INVESTMENT NEEDS LATIN AMERICAN LEGAL FRAMEWORK MARGINAL COSTS MARGINS MONEY MARKET MONOPOLISTIC COMPETITION OWNERSHIP STRUCTURE PERFECT COMPETITION POSITIVE EFFECTS PROPERTY RIGHTS PROXY PUBLIC ENTERPRISES RETURN ON ASSETS STOCK MARKET TOTAL REVENUE TRADE CREDIT TRADE FINANCE TRANSITION ECONOMIES VALUE ADDED The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper the authors first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. Their results suggest that the degree of competition is an important aspect of financial sector functioning. 2012-06-25T14:19:19Z 2012-06-25T14:19:19Z 2005-01 http://documents.worldbank.org/curated/en/2005/01/5588129/financial-dependence-banking-sector-competition-economic-growth http://hdl.handle.net/10986/8906 English Policy Research Working Paper No. 3481 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCOUNTING ACCOUNTING PRACTICES ACCOUNTING STANDARDS ASSET RATIO ASSETS BANKING CONCENTRATION BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SYSTEM BANKING SYSTEMS BANKS BARRIERS TO ENTRY BENCHMARK CAPITAL MARKETS CAPITALIZATION COLLUSION COMMERCIAL BANKS COMPANY LAW COMPARATIVE ADVANTAGE COMPETITIVENESS CONSOLIDATION DEPOSITS DEREGULATION ECONOMIC GROWTH ELASTICITY EMERGING MARKETS EQUILIBRIUM EXPENDITURES EXTERNAL FINANCING FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS GDP GDP PER CAPITA GROWTH POTENTIAL GROWTH RATE INCOME INNOVATION INVESTMENT NEEDS LATIN AMERICAN LEGAL FRAMEWORK MARGINAL COSTS MARGINS MONEY MARKET MONOPOLISTIC COMPETITION OWNERSHIP STRUCTURE PERFECT COMPETITION POSITIVE EFFECTS PROPERTY RIGHTS PROXY PUBLIC ENTERPRISES RETURN ON ASSETS STOCK MARKET TOTAL REVENUE TRADE CREDIT TRADE FINANCE TRANSITION ECONOMIES VALUE ADDED
spellingShingle	ACCOUNTING ACCOUNTING PRACTICES ACCOUNTING STANDARDS ASSET RATIO ASSETS BANKING CONCENTRATION BANKING SECTOR BANKING SECTOR DEVELOPMENT BANKING SYSTEM BANKING SYSTEMS BANKS BARRIERS TO ENTRY BENCHMARK CAPITAL MARKETS CAPITALIZATION COLLUSION COMMERCIAL BANKS COMPANY LAW COMPARATIVE ADVANTAGE COMPETITIVENESS CONSOLIDATION DEPOSITS DEREGULATION ECONOMIC GROWTH ELASTICITY EMERGING MARKETS EQUILIBRIUM EXPENDITURES EXTERNAL FINANCING FINANCIAL ANALYSIS FINANCIAL DEVELOPMENT FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEMS FOREIGN BANKS GDP GDP PER CAPITA GROWTH POTENTIAL GROWTH RATE INCOME INNOVATION INVESTMENT NEEDS LATIN AMERICAN LEGAL FRAMEWORK MARGINAL COSTS MARGINS MONEY MARKET MONOPOLISTIC COMPETITION OWNERSHIP STRUCTURE PERFECT COMPETITION POSITIVE EFFECTS PROPERTY RIGHTS PROXY PUBLIC ENTERPRISES RETURN ON ASSETS STOCK MARKET TOTAL REVENUE TRADE CREDIT TRADE FINANCE TRANSITION ECONOMIES VALUE ADDED Claessens, Stijn Laeven, Luc Financial Dependence, Banking Sector Competition, and Economic Growth
relation	Policy Research Working Paper No. 3481
description	The relationships among competition in the financial sector, access of firms to external financing, and associated economic growth are ambiguous in theory. Moreover, measuring competition in the financial sector can be complex. In this paper the authors first estimate for 16 countries a measure of banking system competition based on industrial organization theory. They then relate this competition measure to growth of industries and find that greater competition in countries' banking systems allows financially dependent industries to grow faster. These results are robust under a variety of tests. Their results suggest that the degree of competition is an important aspect of financial sector functioning.
format	Publications & Research :: Policy Research Working Paper
author	Claessens, Stijn Laeven, Luc
author_facet	Claessens, Stijn Laeven, Luc
author_sort	Claessens, Stijn
title	Financial Dependence, Banking Sector Competition, and Economic Growth
title_short	Financial Dependence, Banking Sector Competition, and Economic Growth
title_full	Financial Dependence, Banking Sector Competition, and Economic Growth
title_fullStr	Financial Dependence, Banking Sector Competition, and Economic Growth
title_full_unstemmed	Financial Dependence, Banking Sector Competition, and Economic Growth
title_sort	financial dependence, banking sector competition, and economic growth
publisher	World Bank, Washington, DC
publishDate	2012
url	http://documents.worldbank.org/curated/en/2005/01/5588129/financial-dependence-banking-sector-competition-economic-growth http://hdl.handle.net/10986/8906
_version_	1764406835950911488

Financial Dependence, Banking Sector Competition, and Economic Growth

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