Banking Concentration in FYROM: Evidence from a Country in Transition

We present an endogenous growth model with two sectors: a real sector where the final good is produced, and a banking sector that intermediates between savers and firms. Banking concentration exerts two opposite effects on growth. On the one hand, it induces economies of specialization, which is beneficial to growth. On the other hand, it results in duplication of banks' investment in fixed capital, which is detrimental to growth. The trade-off between the two opposing effects is ambiguous and can vary along the process of economic development. Hence, there is a potential nonlinear and nonmonotonic relationship between concentration and growth. We test this implication, using cross-country data on income and industry growth. We find that banking concentration is negatively associated with per-capita income growth and industrial growth only in low-income countries. This suggests that reducing concentration is more likely to promote growth in low-income countries than in high-income ones.

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An investigation on the causal relationships between banking concentration and economic growth

International Review of Financial Analysis ◽

10.1016/j.irfa.2006.11.002 ◽

2008 ◽

Vol 17 (3) ◽

pp. 557-570 ◽

Cited By ~ 7

Author(s):

Paolo Coccorese

Keyword(s):

Economic Growth ◽

Causal Relationships ◽

Banking Concentration

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Banking Concentration and Financial Stability: New Evidence from a Developing Country

10.7176/ejbm/11-25-08 ◽

2019 ◽

Keyword(s):

Developing Country ◽

Financial Stability ◽

Banking Concentration ◽

New Evidence

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Banking concentration in the European Union during the last fifteen years

Panoeconomicus ◽

10.2298/pan1102245s ◽

2011 ◽

Vol 58 (2) ◽

pp. 245-266 ◽

Cited By ~ 3

Author(s):

Roberto Santillán-Salgado

Keyword(s):

European Union ◽

Financial Crisis ◽

Structural Changes ◽

Banking Industry ◽

Preliminary Evaluation ◽

The European Union ◽

Strategic Choices ◽

Government Interventions ◽

Banking Concentration ◽

The Government

The increase in the concentration of the banking industry across European Union countries during the last fifteen years can be explained in terms of: a) global factors, like the comprehensive adoption of technological innovations, the intensification of competition that has resulted from the deregulation of the financial sector and, more recently, as a consequence of the government interventions and forced acquisitions prompted by the 2007-2009 financial crisis; and, b) factors that have been specific to the E.U., in particular, the structural changes that took place in the region as a result of the creation of the Single Financial Market (1993) and the introduction of the euro (1999). This work analyzes the concentration process of the banking industry in the E.U. during the last fifteen years giving preeminence to the strategic choices made by the region?s commercial banks. It also reports the most visible E.U. banks? M&As and government interventions that resulted from the 2007-2009 financial crisis, make a preliminary evaluation of the outcomes, and suggests possible future trends for the banking industry in the region.

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