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Federal Reserve Bank of Chicago
Working Paper Series
Banking market structure, financial dependence and growth: international evidence from industry data
Nicola Cetorelli
Michele Gambera
Abstract

This paper explores the empirical relevance of banking market structure on growth. There is substantial evidence of a positive relationship between the level of development of the banking sector of an economy and its long-run output growth. Little is known, however, about the role played by the market structure of the banking sector on the dynamics of capital accumulation. This paper provides evidence that bank concentration promotes the growth of those industrial sectors that are more in need of external finance by facilitating credit access to younger firms. However, we also find evidence of a general depressing effect on growth associated with a concentrated banking industry, which imparts all sectors and all firms indiscriminately.


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Nicola Cetorelli & Michele Gambera, Banking market structure, financial dependence and growth: international evidence from industry data, Federal Reserve Bank of Chicago, Working Paper Series WP-99-8, 1999.
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Keywords: Bank management ; Banking market
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