Small banks and local economic development
Hasan, Iftekhar; Molyneux, Phil; Xie, Ru; Hakenes, Hendrik (29.01.2014)
Numero
5/2014Julkaisija
Bank of Finland
2014
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:bof-20140807597Tiivistelmä
This paper discusses the effects of small banks on economic growth. We first theoretically show that small banks operating at a regional level can spur local economic growth. As compared with big interregional banks, small regional banks are more effective in promoting local economic growth, especially in regions with lower initial endowments and severe credit rationing. We then test the model predictions using a sample of German banks and corresponding regional statistics. We find that small regional banks are more important funding providers in regions with low access to finance. The empirical results support the theoretical hypotheses. JEL Classification: G21, O16, R11. Keywords: small banks, regional economic growth.
Julkaisuhuomautus
Published in Review of Finance, Volume 19, Issue 2, 1 March 2015: 653-683