Big Banks and Macroeconomic Outcomes: Theory and Cross‐Country Evidence of Granularity

Aufsätze referiert extern - Web of Science 8 / 2018

Franziska Bremus, Claudia M. Buch, Katheryn N. Russ, Monika Schnitzer

In: Journal of Money, Credit and Banking 50 (2018), 8, S. 1785-1825

Abstract

Does the mere presence of big banks affect macroeconomic outcomes? We develop a theory of granularity for the banking sector by modeling heterogeneous banks charging variable markups. Using data for a large set of countries, we show that the banking sector is indeed “granular,” as the right tail of the bank size distribution follows a power law. We demonstrate empirically that the presence of big banks, measured by a high degree of market concentration, is associated with a positive and significant relationship between bank‐level credit growth and aggregate growth of credit or GDP.

Franziska Bremus

Wissenschaftliche Mitarbeiterin in der Abteilung Makroökonomie

Themen: Finanzmärkte



JEL-Classification: E31;G21
Keywords: granularity, concentration, bank competition, macroeconomic outcomes, markups
DOI:
https://doi.org/10.1111/jmcb.12545