An Analysis of Bank Competiveness, Financial Intermediation and Entrepreneurship Development in African Economies

Given probable nexus between financial intermediation and entrepreneurship development, this paper uses multivariate regression techniques to test the impact of bank competitiveness on the nexus in forty-two African economies. With data obtained from the World Development Indicators, the results reveal that lending rates, the proxy for financial intermediation positively impacts business start-up-cost, the proxy for entrepreneurship, while bank competitiveness negatively impacts business start-up-cost, which suggests that banking competitiveness has the capacity to improve entrepreneurship in African economies. The region’s economies should reduce monetary base rates to single digit; advanced liberalization of the financial industry; encourage stronger competition through digital finance; lessen the requirements for new conventional bank entry; provide fiscal support for increased bank branching

The determinants of bank branch location in India: an empirical investigation

PurposeBank branching plays a significant role in a wide range of economic activities. Existing studies on determinants of bank branching activities largely focus on developed countries; studies devoted to developing countries are scant. The purpose of this paper is to examine the determinants of bank branching activities in one of the largest developing country India.Design/methodology/approachThe authors employ a unique longitudinal data to study the determinants of bank branch location in India. These data are collected at the state level covering 25 Indian states for the period 2006–2017. The authors employ Poisson regression that are better suited for modeling counted dependent variable.FindingsFirst, region and bank specific factors such as size of population and bank deposits influence location of bank branches. Second, the relationship between these factors and branch locations is heterogeneous across different types of banks and across states with different business environments.Practical implicationsFirst, from the view of banks, considering the factors of branch location are crucial in order to set out branching strategy. Irrespective of policy measures aimed at promoting financial inclusion in India, the authors show that banks consider economic activities in the region in locating their branches. Second, from the view of policy makers and regulators, such branching strategy could potentially contribute to financial exclusion. As a result, population in the less developed regions may be excluded from accessing financial services. Hence, policy makers and regulators should take into this account when formulating policies aimed at promoting financial inclusion.Originality/valueFirst, while existing studies largely focus on developed countries, studies devoted to developing countries are scant. To the best of our knowledge, the authors have not come across any study that investigates the determinants of bank branch location in India, so the authors reasonably believe that this study is a first-of-its-kind. Second, the study provides a new perspective concerning how regional and bank specific factors influence banks of different ownership in locating branches. Third, while traditional regression used to be a method of choice among early studies, the authors employ Poisson regression that is better suited for modeling counted dependent variable.

Bank branching, concentration, and local economic growth in pre-WW1 England and Wales

This paper explores the relationship between the spread of bank offices, banking sector concentration, and economic growth in English and Welsh counties in the four decades before WW1. During this period, banks rapidly expanded their branch networks, while banking sector concentration increased. Findings from both panel fixed effects and instrumental variable regressions suggest that an increase in the number of bank offices in English and Welsh counties had a positive impact on local economic growth. There is no evidence of banking sector concentration being negatively associated with local economic performance prior to WW1.

Credit availability and voluntary disclosures : evidence from interstate branching deregulation

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI--COLUMBIA AT REQUEST OF AUTHOR.] This study examines whether the increased availability of bank loans affects borrowers' voluntary disclosures. Exploiting the staggered deregulation of interstate bank branching across states in the U.S., I find that bank-dependent firms decrease their voluntary disclosures following bank branching deregulation. This overall effect is muted for firms with higher information asymmetry in the public capital markets and higher litigation risk. Furthermore, the decline in voluntary disclosures is more pronounced among borrowers with higher proprietary information costs and stronger lending relationships with their lenders. Further analysis reveals that bank-dependent firms that stop issuing earnings guidance after branching deregulation experience decreased liquidity in the equity market. Overall, this paper sheds light on how regulatory changes in the banking sector have externalities on borrowers' disclosure decisions.