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The size and growth of banks: evidence from four European countries

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  • J. O. S. Wilson
  • J. M. Williams

Abstract

This paper investigates the relationship between size and growth for a sample of banks from France, Germany, Italy and the UK over the period 1990 to 1996. Using several measures of bank size (total assets, equity and value of off balance sheet business), we test for size effects on growth, using models which incorporate the influences of previous growth, bank type and country of origin. The results of the analysis suggest that for Italy, small banks tend to grow faster than larger banks. No relationship is found between bank size and growth for France, Germany and the UK. This suggests a process of increasing concentration in these banking systems, even in the absence of bank specific strategic advantages. Small banks tend to have more variable growth rates than their larger counterparts. This suggests that large banks may enjoy advantages associated with diversified operations, which make them less susceptible to periods of extremely high or low growth.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 32 (2000)
Issue (Month): 9 ()
Pages: 1101-1109

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Handle: RePEc:taf:applec:v:32:y:2000:i:9:p:1101-1109

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Cited by:
  1. Goddard, John & Molyneux, Philip & Wilson, John O.S. & Tavakoli, Manouche, 2007. "European banking: An overview," Journal of Banking & Finance, Elsevier, vol. 31(7), pages 1911-1935, July.
  2. Carlos Budnevich & Helmut Franken & Ricardo Paredes, 2001. "Economías de Escala y Economías de Ámbito en el Sistema Bancario Chileno," Working Papers Central Bank of Chile 93, Central Bank of Chile.
  3. Kaldasch, Joachim, 2013. "Evolutionary model of the bank size distribution," Economics Discussion Papers 2013-55, Kiel Institute for the World Economy.
  4. Giulio Bottazzi & Alex Coad & Nadia Jacoby & Angelo Secchi, 2005. "Corporate growth and industrial dynamics: evidence from french manufacturing," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00261616, HAL.
  5. Jan Bentzen & Erik Madsen & Valdemar Smith, 2012. "Do firms’ growth rates depend on firm size?," Small Business Economics, Springer, vol. 39(4), pages 937-947, November.
  6. John Goddard & David McMillan & John Wilson, 2006. "Do firm sizes and profit rates converge? Evidence on Gibrat's Law and the persistence of profits in the long run," Applied Economics, Taylor & Francis Journals, vol. 38(3), pages 267-278.
  7. Peik Granlund, 2004. "Economic evaluation of bank exit regimes in US, EU and Japanese financial centres," Finance 0405002, EconWPA.
  8. Enrique Benito, 2008. "Size, growth and bank dynamics," Banco de Espa�a Working Papers 0801, Banco de Espa�a.
  9. repec:hal:journl:halshs-00200086 is not listed on IDEAS
  10. Goddard, John A. & McKillop, Donal G. & Wilson, John O. S., 2002. "The growth of US credit unions," Journal of Banking & Finance, Elsevier, vol. 26(12), pages 2327-2356.
  11. Granlund , Peik, 2003. "Economic evaluation of bank exit regimes in US, EU and Japanese financial centres," Research Discussion Papers 5/2003, Bank of Finland.

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