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Banking market structure and industry growth in the Central-East Europe region

Author

Listed:
  • Angela S. Bergantino

    (University of Bari “Aldo Moro”)

  • Claudia Capozza

    (University of Bari “Aldo Moro”)

Abstract

Using cross-country cross-industry data, this paper explores how industry’s growth in number of firms in Central-East Europe (CEE) region is influenced by bank concentration in both the pre-crisis and crisis periods. The CEE region shows highly concentrated banking markets and less-developed financial markets; thus, the level of bank concentration and the resulting credit supply are crucial for firm creation and survival. Despite this, there is little evidence on these countries in the literature. Our empirical results suggest an inverted-U relationship: industry growth is fostered by bank concentration, but there is a turning point from which higher concentration begins producing the opposite effect. Moreover, the positive impact has a greater intensity during the crisis period compared to the pre-crisis period. Between sectors’ analysis shows that high-tech sectors are less reactive to changes in the concentration level.

Suggested Citation

  • Angela S. Bergantino & Claudia Capozza, 2018. "Banking market structure and industry growth in the Central-East Europe region," Empirical Economics, Springer, vol. 54(3), pages 1319-1333, May.
    • Handle: RePEc:spr:empeco:v:54:y:2018:i:3:d:10.1007_s00181-017-1262-1
    DOI: 10.1007/s00181-017-1262-1
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    More about this item

    Keywords

    Industry growth; Bank concentration; Transition economies; High-tech industries; Regional development;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • P20 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - General
    • P34 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Finance

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