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Bank competition, financial dependence, and economic growth in the Gulf Cooperation Council

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  • Caggiano,Giovanni
  • Calice,Pietro

Abstract

The relationship between bank competition, firm access to finance, and economic growth is a much debated topic in the economic literature and in policy circles. This paper uses a panel of 23 manufacturing sectors over 2002-10 to investigate the impact of bank competition on industry growth in the Gulf Cooperation Council economies. The results show that greater competition allows financially dependent firms to grow faster. In addition, the results show that lower restrictions on banks? permissible activities, better credit information, and greater institutional effectiveness mitigate the damaging impact of low competition. These results are robust to a variety of checks. The findings suggest that improving bank competition should be an important aspect of the financial sector development agenda in the Gulf Cooperation Council.

Suggested Citation

  • Caggiano,Giovanni & Calice,Pietro, 2016. "Bank competition, financial dependence, and economic growth in the Gulf Cooperation Council," Policy Research Working Paper Series 7687, The World Bank.
  • Handle: RePEc:wbk:wbrwps:7687
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    File URL: http://documents.worldbank.org/curated/en/880411467996715396/pdf/WPS7687.pdf
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    1. Padilla, A. Jorge & Pagano, Marco, 2000. "Sharing default information as a borrower discipline device," European Economic Review, Elsevier, vol. 44(10), pages 1951-1980, December.
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    1. repec:eee:jebusi:v:96:y:2018:i:c:p:15-41 is not listed on IDEAS

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    Keywords

    Debt Markets; Banks&Banking Reform; Access to Finance; Labor Policies; Emerging Markets;

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