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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.

Suggested Citation

  • J. O. S. Wilson & J. M. Williams, 2000. "The size and growth of banks: evidence from four European countries," Applied Economics, Taylor & Francis Journals, vol. 32(9), pages 1101-1109.
    • Handle: RePEc:taf:applec:v:32:y:2000:i:9:p:1101-1109
    DOI: 10.1080/000368400404245
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    1. William R. White, 1998. "The coming transformation of continental european banking?," BIS Working Papers 54, Bank for International Settlements.
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