Further Evidence on the Link between Finance and Growth: An International Analysis of Community Banking and Economic Performance

By Allen N. Berger, Iftekhar Hasan, L. Klapper. 2003

374 citations recorded by the source corpus.

We try to contribute to both the finance-growth literature and the community banking literature by testing the effects of the relative health of community banks on economic growth, and investigating potential transmission mechanisms for these effects using data from 1993 to 2000 on 49 nations. Data from both developed and developing nations suggest that greater market shares and efficiency ranks of small, private, domestically owned banks are associated with better economic performance, and that the marginal benefits of higher shares are greater when these banks are more efficient. Only mixed support is found for hypothesized transmission mechanisms through improved financing for small and medium enterprises or greater overall bank credit flows. Data from developing nations are also consistent with favorable economic effects of foreign-owned banks, but unfavorable effects from state-owned banks.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/05181414c882ab5c1d375f009360902f7dacf7ea

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

In Finance

Citations in the corpus

Banking Deregulation and Innovation (2013, methodology): “Some other studies, however, document unfavorable effects (e.g., Black and Strahan, 2002; Berger, Hasan, and Klapper, 2004; Karceski, Ongena, and Smith, 2005; Cetorelli and Strahan, 2006).”
Bank Financing for SMEs: Evidence Across Countries and Bank Ownership Types (2009, background): “2004) and large shares of government bank ownership are typically associated with unfavorable macroeconomic consequences and less developed financial and economic systems (e.g., La Porta et al. 2002; Barth et al. 2004; Berger et al. 2004).”
What Determines the Composition of Banks' Loan Portfolios? Evidence from Transition Countries (2010, neutral): “Such methods to assess creditworthiness tend to use ‘hard’ information like financial ratios calculated on the basis of financial statements (Berger et al., 2001). Foreign banks that lack local knowledge may therefore mainly grant credit to large and foreign-owned firms, which tend to be more transp”
Exporting financial institutions management via foreign direct investment mergers and acquisitions (2004, background): “A related study of the role of foreign-owned banks in 28 developing countries found that a greater share of foreign-owned banks was associated with greater lending to small and medium enterprises (SMEs) and higher GDP growth (Berger et al., 2004).”
Bank ownership type and banking relationships (2006, neutral): “The empirical results are mixed, with some finding more credit availability (e.g., Petersen and Rajan, 1995; Cetorelli and Gambera, 2001) and some finding less availability (e.g., Black and Strahan, 2002; Berger et al., 2004) when measured market power is relatively high.”
Competition and regulation in the banking sector: A review of the empirical evidence on the sources of bank rents (2007, background): “While the early SCP approach was successful in documenting the importance of market structure for various bank interest rates, Berger et al. (2004) surely presents the consensus view when they write, “the [empirical banking] literature has now advanced well past this simple approach”.”
Do Small Businesses Still Prefer Community Banks (2013, background): “…find both favorable effects (e.g., Petersen and Rajan 1995, Cetorelli and Gambera 2001, Bonaccorsi di Patti and Dell’Ariccia 2004, Cetorelli 2004) and unfavorable effects (e.g., Black and Strahan 2002, Berger, Hasan, and Klapper 2004, Karceski, Ongena, and Smith 2005, Cetorelli and Strahan 2006).”
Remittances and Financial Development:;Substitutes or Complements in Economic Growth? (2012, neutral): “(2001); Berger et al. (2004); Hasan et al. (2007); Inklaar and Koetter (2008). In a recent study, Kessy (2008) found that the microeconomic efficiency of banks is positively correlated to economic growth of bank efficiency in the three East African countries of Kenya, Tanzania and Uganda.”
Bank Concentration and Competition: An Evolution in the Making (2004, background): “…in this area suggests that large concentrations of state bank ownership are associated with less competition and generally unfavorable economic consequences (e.g., Barth, Caprio, and Levine, 2001a, 2001b, 2004, La Porta, Lopez-de-Silanes, and Shleifer, 2002, Berger, Hasan, and Klapper, 2004).”
A More Complete Conceptual Framework for Financing of Small and Medium Enterprises (2005, background): “…inefficient and that large shares of state bank ownership are typically associated with unfavorable macroeconomic consequences and less developed financial and economic systems (e.g., La Porta, Lopez-de-Silanes, and Shleifer 2002, Barth, Caprio, and Levine 2004, Berger, Hasan, and Klapper 2004).”