2005年-世界发展银行全球_Financial_Dependence_Banking_Sector_Competition_and_Economic_Growth_49页_318kb

Summary of "Financial Dependence, Banking Sector Competition, and Economic Growth"

Core Content

This paper explores the relationship between banking sector competition, financial dependence of firms, and economic growth. It argues that competition in the financial sector is a critical factor in determining how effectively firms can access external financing, which in turn influences industrial growth. The study uses a structural model based on industrial organization theory to measure banking system competition, distinguishing it from traditional market structure indicators.

Main Viewpoints

• Ambiguity in Theoretical Relationships: Theoretical literature suggests that the relationship between financial sector competition and firm growth is not straightforward. While more competition may reduce hold-up problems and lower financial intermediation costs, it could also lead to reduced financing availability due to lower incentives for relationship banking.

• Empirical Focus on Financial Dependence: The paper emphasizes the importance of financial dependence in understanding how competition affects growth. Firms that rely more on external financing are likely to benefit more from competitive banking systems, as they can access better and more diverse financial services.

• Competition Measure Based on Industrial Organization Theory: The authors use the Panzar-Rosse (PR) H-statistic, which measures the responsiveness of bank revenues to changes in input prices. A negative H-statistic indicates monopoly, a positive value indicates perfect competition, and values between 0 and 1 suggest monopolistic competition.

• Robustness of Results: The findings are robust across different measures of financial development, time periods, and instrumental variables techniques. The paper shows that banking system competition positively affects the growth of industries that are financially dependent, while market structure (concentration) does not have a significant predictive power for industrial growth.

• Policy Implications: The results suggest that promoting competition in the banking sector can enhance the financial system's ability to support growth, especially for firms that depend heavily on external financing. This has important implications for regulatory and policy design in financial sectors.

Key Information

Competition and Financial Development

• The H-statistic is a structural measure of competition that accounts for the contestability of the financial system.
• Traditional indicators like market concentration do not fully capture the degree of effective competition in the banking sector.
• The authors find that more competitive banking systems are associated with higher growth in financially dependent industries.

Methodology

• The paper builds on the methodology of Rajan and Zingales (1998), which links financial development to industrial growth by using external financial dependence ratios.
• The H-statistic is calculated using reduced-form revenue equations and measures the sum of elasticities of total bank revenue with respect to input prices.
• The regression model includes interaction terms between financial dependence and financial development, as well as between financial dependence and the competition index.

Empirical Findings

• Positive Association with Growth: The competitiveness measure is positively associated with industrial growth.
• No Significant Relationship with Market Concentration: The paper finds no evidence that banking sector concentration helps predict industrial growth.
• Robustness Across Time Periods: Results are consistent across different time periods (1980–1990 and 1980–1997).
• Control for Other Factors: The model includes controls for industry market share, financial development, property rights, legal origin, and accounting standards.

Data Sources

• Growth: Average annual real growth rate of value added in a sector, based on UNIDO data.
• Financial Dependence: External financial dependence ratio of U.S. firms by ISIC sector (1980–1989), used as a benchmark.
• Private Credit: Private credit divided by GDP in 1980.
• Market Cap: Stock market capitalization divided by GDP in 1980.
• Total Capitalization: Sum of private credit and market cap.
• Concentration: Measure of bank concentration, based on the market shares of the three largest banks (1989–1996).
• Competition: H-statistic calculated from 1987–1996, using data from Bankscope.
• Accounting Standards: Measure of accounting standards in 1983.
• Property Rights: Median score from 1995–1999, with a scale from 1 to 5, where higher scores indicate better protection of property rights.
• GDP per Capita: Logarithm of GDP per capita in 1980, sourced from World Bank data.
• Legal Origin: Categorizes countries by their legal origin (English common law, French commercial code, German commercial code, Scandinavian commercial code), based on La Porta et al. (1998).

Conclusion

• The study concludes that the degree of competition in the financial sector is an important determinant of economic growth, particularly for industries that are financially dependent.
• It suggests that competition should be a key focus in financial sector reforms and that traditional indicators of market structure may not be sufficient to capture the true level of competition.
• While the results are robust, the authors acknowledge that long-term effects of market power on stability and growth may not be fully captured in the current analysis.