Finance and Growth in a Bank-Based Economy: Is it Quantity or Quality that Matters?

Abstract

With this paper we seek to contribute to the literature on the relation betweennance and growth. We argue that most studies in the eld fail to measure the quality of nancial intermediation but rather resort to using proxies on the size of nancial systems. Moreover, cross-country comparisons suer from the disadvantage that systematic dierences between markedly dierent economies may drive the result that nance matters. To circumvent these two problems we examine the importance of the quality of banks' nancial intermediation in the regions of one economy only: Germany. To approximate the quality of nancial intermediation we use cost eciency estimates derived with stochastic frontier analysis. We nd that the quantity of supplied credit is indeed insignicant when a measure of intermediation quality is included. In turn, the eciency of intermediation is robust, also after excluding banks likely to operate in multiple regions and distinguishing between dierent banking pillars active in Germany.

Spillovers of banking regulation: the effect of the German bank levy on the lending rates of regional banks and their local competitors

“…Then, we used this information to merge the bank-level data with the regional data which we obtained from Eurostat. Koetter & Wedow (2010) analyzed whether German banks operate across multiple NUTS2 regions. Their approach was to check whether a bank's branches are located in the same Raumordnungsregion 5 which are smaller than NUTS2 regions.…”

Financing the investment demand of the real sector of economy with resources of the regional banking system

“…Снижение эффективности деятельности банков и увеличение ри-сков финансирования инвестиций пред-приятий в условиях кризиса привели к увеличению потребности банковской системы в государственном участии. По результатам регулярного исследования региональной экономики и банковско-го сектора, проводимого территориаль-ными подразделениями Центрального банка РФ, государственные программы поддержки являются существенным фактором стимулирования регионально-го кредитования, особенно в регионах с большой долей просроченных кредитов 3 . По результатам мониторинга на протя-жении 2016 г. в Хабаровском крае зна-чимость фактора участия государства в поддержании инвестиционной актив-ности банков оставалась высокой.…”

“…Рост финансового сектора экономики не всегда сопрово-ждается адекватным ростом реального: существуют свидетельства как положи-тельной взаимосвязи, что характерно для развитых стран [1][2][3], так и отрица-тельной, что свойственно развивающим-ся рынкам [4][5], в которых финансовый сектор на определенном этапе начинает доминировать над реальным.…”

Do all new brooms sweep clean? Evidence for outside bank appointments

“…The banking structure in Germany, with its large number of small and medium-sized cooperative and savings banks, requires controlling for heterogeneity in efficiency analysis (e.g. Koetter and Wedow, 2010). Therefore, we control for systematic differences across the bank sectors by adding dummies to the deterministic kernel of the frontier.…”

“…small and mid-sized companies), (still) rely heavily on bank lending (e.g. Koetter and Wedow, 2010). Therefore, one may argue that finding good successors is of even greater importance in this country than in those where a firm's finance is less tied to banks.…”