Does bank competition reduce cost of credit? Cross-country evidence from Europe

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F67985998%3A_____%2F17%3A00478085" target="_blank" >RIV/67985998:_____/17:00478085 - isvavai.cz</a>
Alternative codes found
RIV/00216208:11230/17:10363655
Result on the web
<a href="http://dx.doi.org/10.1016/j.jbankfin.2017.06.014" target="_blank" >http://dx.doi.org/10.1016/j.jbankfin.2017.06.014</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1016/j.jbankfin.2017.06.014" target="_blank" >10.1016/j.jbankfin.2017.06.014</a>

Result language
angličtina
Original language name
Does bank competition reduce cost of credit? Cross-country evidence from Europe
Original language description
Despite the extensive debate on the effects of bank competition on economic welfare and growth, only a handful of single-country studies deal with the impact of bank competition on the cost of credit. We contribute to the literature by investigating the impact of bank competition on the cost of credit in a cross-country setting. Using a panel of firms from 20 European countries covering the period 2001–2011, we consider a broad set of measures of bank competition, including two structural measures (Herfindahl–Hirschman index and CR5), and two non-structural indicators (Lerner index and H-statistic). We find that bank competition increases the cost of credit and observe that the positive influence of bank competition is stronger for smaller companies. Our findings accord with the information hypothesis, whereby a lack of competition incentivizes banks to invest in soft information and conversely increased competition raises the cost of credit. This positive impact of bank competition is however influenced by the institutional and economic framework, as well as by the crisis.
Czech name
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Czech description
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Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
—
OECD FORD branch
50206 - Finance

Project
<a href="/en/project/GA14-31783S" target="_blank" >GA14-31783S: Firm behavior in changing economic environment</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2017
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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