The Effect of Bank Concentration on Entrepreneurship in Central and Eastern European Transition Countries

Bergantino, Angela Stefania; Capozza, Claudia

doi:10.2139/ssrn.2175624

Cited by 4 publications

(5 citation statements)

References 29 publications

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“…Therefore, banks' higher market power is detrimental to firm creation (Agostino and Trivieri 2016). Our results also support the study of Raja et al (2014) who show that greater bank competition benefits new business creation in India which contradicts the study of Bergantino and Capozza (2012). Our results are in line with the recent submission of Elitcha (2019) who use worldwide database to examine the mediating effect of stock market development in the relationship between entrepreneurship and bank competition.…”

Section: Table 4 (Continued)supporting

confidence: 86%

“…Higher number of banks in an economy means less bank concentration which improve the level of competition in the banking industry. An increase in the number of independent banks would create opportunity to have multiple finances for entrepreneurial purposes (Bergantino and Capozza 2012).…”

Section: Data and Model Specificationsmentioning

confidence: 99%

“…Necessity entrepreneurship is not driven by innovation. Therefore, it may retard growth process, it exists because there is no better job option (Block et al 2015). Furthermore, the generated value-added is residual and the economic growth is ephemeral because there is no associated innovation and technology in the entrepreneurial process (Brás and Elias Soukiazis 2018).…”

Section: Table 4 (Continued)mentioning

confidence: 99%

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Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

Ajide

Osinubi

2020

Econ Change Restruct

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This study investigates the impact of foreign aid and remittance inflows on entrepreneurship progress in Africa. The role of institutional quality in the relationship between foreign aid and entrepreneurship is also investigated. We explore data of 19 African countries for a period of 2006-2017, and panel data regression techniques are employed. The study finds that: (1) Foreign aid impact on entrepreneurship is negative. (2) The remittances mediate the negative impact of foreign aid on entrepreneurship. (3) Institutional quality mediates the negative impact of foreign aid on entrepreneurial progress. (4) The threshold level of remittance at which foreign aid would meaningfully enhance entrepreneurship is 10.59 as a percentage of GDP while that of institutional quality is 5.04 on a scale of 10 point. (5) The role of remittances and foreign aids is complementary in firm start-up activities. (6) Institutional quality plays important roles in moderating impact of foreign aid on firm start-up activities. In addition, our results show that concentration in banking industry does not benefit entrepreneurial activities. The study concludes that foreign aids and remittances perform complementary roles in improving the level of entrepreneurial development in Africa. The strong institutional environment is very important in promoting entrepreneurial success. These findings are robust to alternative estimations.

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Section: Table 4 (Continued)supporting

confidence: 86%

Section: Data and Model Specificationsmentioning

confidence: 99%

Section: Table 4 (Continued)mentioning

confidence: 99%

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Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

Ajide

Osinubi

2020

Econ Change Restruct

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“…As far as other countries are concerned, using Italian data at local credit markets level in the 1990s, Bonaccorsi di Patti and Dell'Ariccia (2004) provide evidence of a bell-shaped relationship between bank market power and firm creation. A similar result is reached by Gagliardi (2009), with Italian data spanning from 1998 to 2003, and by Bergantino and Capozza (2012), for Central and Eastern European transition economies in the period 2000-2007.…”

Section: 2supporting

confidence: 74%

Bank market power and firm creation: a multi-country analysis

Agostino

Trivieri

2016

Journal of Small Business and Enterprise Development

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Purpose – The purpose of this paper is to investigate the relationship between bank market power and firm creation, which represents a debated issue in the economic literature, still lacking empirical evidence. Design/methodology/approach – The analysis is carried out by taking an international perspective, using different measures of banking competition, and controlling for a large set of determinants suggested by the variegate literature on firms’ birth drivers. Findings – The main finding suggests that credit market competition may benefit firms’ creation, as the relationship between the latter and bank market power – when statistically significant – appears to be negative. In addition, the detrimental impact of market power appears greater (in absolute terms) when departing from higher levels of banking competition. Research limitations/implications – The empirical evidence seems supporting the competitive position in the debate on the role of banking competition. Furthermore, the authors reckon that the findings reinforce the belief of a crucial role played by the availability of funds for nascent firms, with evident implications for the policy strategies more appropriate to foster entrepreneurship. The “fashion” followed by several countries of lowering administrative entry barriers (van Stel et al., 2007) needs to be reappraised, pondering also means to enrich resources availability. Originality/value – To the best of the knowledge, the paper is the first one addressing the issue of the role of bank market structure on firms’ creation in a multi-country setting.

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“…In contrast, a less competitive environment where banks can afford higher capital buffers and less aggressive operations means the incentive to take increased unnecessary risk diminishes, enhancing the stability of the banking sector overall. Bergantino and Capozza (2013) say that bigger banks can afford to give low interest rates to new start-ups and share future profits. In addition, it is easier for the financial authorities to monitor a banking sector with fewer and bigger banks.…”

Section: Introductionmentioning

confidence: 99%

Banking sector concentration, competition and financial stability: the case of the Baltic countries

Cuestas

Lucotte

Reigl

2019

Post-Communist Economies

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This paper empirically assesses the potential nonlinear relationship between competition and bank risk for a sample of commercial banks in the Baltic countries over the period 2000-2014. Competition is measured by two alternative indexes, the Lerner index and the market share, while we consider the Z-score and loan loss reserves as proxies for bank risk. In line with the theoretical predictions of Martinez-Miera and Repullo (2010), we find an inverse U-shaped relationship between competition and financial stability. This then means that above a certain threshold, the lack of competition is likely to exacerbate the individual risk-taking behaviour of banks, and could be detrimental to the stability of the banking sector in the Baltic countries. The threshold is around 0.60 for the Lerner index, and close to 50% for market share in terms of assets. The policy implications are that the existence of such a threshold suggests that the future evolution of the structure of the banking industry in these countries is of critical importance. Specifically, this implies that policy-makers should place greater emphasis on mergers and acquisitions to avoid any significant increase of banking sector concentration.

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The Effect of Bank Concentration on Entrepreneurship in Central and Eastern European Transition Countries

Cited by 4 publications

References 29 publications

Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

Foreign aid and entrepreneurship in Africa: the role of remittances and institutional quality

Bank market power and firm creation: a multi-country analysis

Banking sector concentration, competition and financial stability: the case of the Baltic countries

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