Finance and growth in a bank-based economy: Is it quantity or quality that matters?
Most finance-growth studies approximate the size of financial systems rather than the quality of intermediation to explain economic growth differentials. Furthermore, the neglect of systematic differences in cross-country studies could drive the result that finance matters. We suggest a measure of bank's intermediation quality using bank-specific efficiency estimates and focus on the regions of one economy only: Germany. This quality measure has a significantly positive effect on growth. This result is robust to the exclusion of banks operating in multiple regions, controlling for the proximity of financial markets, when distinguishing different banking sectors active in Germany, and when excluding the structurally weaker East from the sample.
Year of publication: |
2010
|
---|---|
Authors: | Koetter, Michael ; Wedow, Michael |
Published in: |
Journal of International Money and Finance. - Elsevier, ISSN 0261-5606. - Vol. 29.2010, 8, p. 1529-1545
|
Publisher: |
Elsevier |
Keywords: | Financial development Intermediation quality Regional growth Bank efficiency |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Still Overbanked and Unprofitable? Two Decades of German Banking
Koetter, Michael, (2006)
-
Credit risk connectivity in the financial industry and stabilization effects of government bailouts
Bosma, Jakob, (2012)
-
Structures and Trends in German Banking
Koetter, Michael, (2004)
- More ...