Regional growth and finance in Europe: Is there a quality effect of bank efficiency?
AbstractIn this study, we test whether regional growth in 11 European countries depends on financial development and suggest the use of cost- and profit-efficiency estimates as quality measures for financial institutions. Contrary to the usual quantitative proxies for financial development, the quality of financial institutions is measured in this study as the relative ability of banks to intermediate funds. An improvement in bank efficiency spurs five times more regional growth than does an identical increase in credit. More credit provided by efficient banks exerts an independent growth effect in addition to the direct quantity and quality channel effects.
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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 13/2009.
Length: 27 pages
Date of creation: 18 May 2009
Date of revision:
bank performance; regional growth; bank efficiency; Europe;
Other versions of this item:
- Hasan, Iftekhar & Koetter, Michael & Wedow, Michael, 2009. "Regional growth and finance in Europe: Is there a quality effect of bank efficiency?," Journal of Banking & Finance, Elsevier, vol. 33(8), pages 1446-1453, August.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- O47 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
- O52 - Economic Development, Technological Change, and Growth - - Economywide Country Studies - - - Europe
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-BAN-2009-07-11 (Banking)
- NEP-EEC-2009-07-11 (European Economics)
- NEP-EFF-2009-07-11 (Efficiency & Productivity)
- NEP-FDG-2009-07-11 (Financial Development & Growth)
- NEP-GEO-2009-07-11 (Economic Geography)
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