This article examines the links between financial development and real economic activity, focusing on the specific mechanisms, such as competition, which link bank activity to the real economy. Evidence suggests that bank concentration is inversely related to economic growth due to lower credit availability, although this effect varies across industries. For instance, concentration allows for the development of long-lasting lending relationships and this seems to enhance growth in industries where young firms are more dependent on external finance.
Keywords: financial development; economic growth; competition; bank concentration
Article. 8582 words.
Subjects: Economics ; Financial Markets ; Public Economics
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