Nothing Special About Banks: Competition and Bank Lending in Britain, 1885–1925

Braggion, Fabio; Dwarkasing, Narly; Moore, Lyndon

doi:10.1093/rfs/hhx044

Cited by 30 publications

(9 citation statements)

References 53 publications

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“…Clerides et al (2015) used all the three measures of bank competition, namely, Lerner index, adjusted Lerner index and Boone indicator, to estimate the degree of competition in the banking sector of 148 countries covering the period 1997–2010. Braggion et al (2017) investigated the impact of increasing bank concentration on bank lending in Britain over 1885–1925. They concluded that borrowers in counties with higher bank concentration received smaller loans and submitted more collateral than borrowers in other counties submit.…”

Section: Literature Reviewmentioning

confidence: 99%

Does bank competition promote economic growth? Empirical evidence from selected South Asian countries

Rakshit

Bardhan

2019

SAJBS

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Purpose Bank competition and financial stability are often cited as important drivers of economic growth. Bank competition plays a very significant role in enhancing the efficiency and determining the stability of a financial system. However, a question of interest is whether bank competition enhances or hindrances the economic growth of a country. The purpose of this paper is to investigate the role of bank competition and financial stability on economic growth for selected South Asian economies over the period 1997–2016. Design/methodology/approach To investigate whether bank competition enhances or hinders economic growth, the author applies a two-step estimation technique. First, the author estimates bank competition using the Lerner index and adjusted Lerner index and, second, examines the joint effect of bank competition and financial stability on economic growth applying both panel regression model and system GMM techniques. Findings Empirical findings reveal that the banking sector in South Asian economies is competitive as indicated by the estimated values of Lerner and adjusted Lerner index. Moreover, the joint effect defined by the interaction between banking competition and banking stability also reveals a positive and significant impact on economic growth. This finding implies that both banking competition and banking stability are significant long-term determinants of economic growth in South Asian economies. Practical implications This paper suggests flexible banking regulation policies such as low net interest rate margins, lesser activity restrictions and entry of foreign banks along with few contestability measures to increase bank competition in South Asian countries. This is because as higher the competition, greater is the chance for efficient allocation of resources and hence economic growth. Originality/value This paper is the first of its kind that considers the joint role of bank competition and financial stability on economic growth. The application of a semi-parametric approach in the estimation of marginal cost is also a unique contribution to empirical literature.

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Section: Literature Reviewmentioning

confidence: 99%

Does bank competition promote economic growth? Empirical evidence from selected South Asian countries

Rakshit

Bardhan

2019

SAJBS

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“…Unobserved heterogeneity remains a key challenge in that setting. Braggion et al (2017) use historical micro data from the UK to overcome some of these identication challenges, while Carlson et al (2018) use population changes as exogenous variation during the National Banking Era in the US for identication. directly in many credit markets.…”

Section: Introductionmentioning

confidence: 99%

The Effects of Competition in Consumer Credit Markets

Gissler

Ramcharan

2020

The Review of Financial Studies

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This paper finds that banks and nonbanks respond differently to increased competition in consumer credit markets. Increased competition and a greater threat of failure induces banks to specialize in relationship business lending, and surviving banks are more profitable. However, nonbanks change their credit policy when faced with more competition and expand credit to riskier borrowers at the extensive margin, resulting in higher default rates. These results show how the effects of competition depend on the form of intermediation. They also suggest that increased competition can cause credit risk to migrate outside the traditional supervisory umbrella.

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“…Hannah details intense pre-World War One local competition in financial services in the city of Oxford (Hannah, 2017, 79-83). Braggion, Dwarkasing and Moore (2017), however, find that amalgamations reduced competition: borrowers of comparable quality in counties with higher concentration in banking received smaller loans and posted more or higher quality collateral.…”

Section: Lending Practice Local Banks and Competitionmentioning

confidence: 91%

Debating banking in Britain: The Colwyn committee, 1918

2019

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By 1918 the British banking system had reached a degree of maturity and concentration, with a small number of large banks dominating the sector. Political concerns about the rise of financial power led to the appointment of the Colwyn Committee to investigate the amalgamations process, and consider the issue of concentration with reference to the role of banking in the economy. In this paper we explore this critical inflection point in British banking history and argue that the Committee's proceedings reveal that many current concerns about banking correspond to those of a century ago. We also argue that-contrary to some historical interpretation-the Committee did not unequivocally favour financial interests, but rather sought to stabilise organisational change in the sector, and introduce new restrictions on the freedom of banks in respect of amalgamation, as well as supervision and regulation.

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Nothing Special About Banks: Competition and Bank Lending in Britain, 1885–1925

Cited by 30 publications

References 53 publications

Does bank competition promote economic growth? Empirical evidence from selected South Asian countries

Does bank competition promote economic growth? Empirical evidence from selected South Asian countries

The Effects of Competition in Consumer Credit Markets

Debating banking in Britain: The Colwyn committee, 1918

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