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A Peer-reviewed scientific articles/A1 Journal article (refereed), original research
      
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Does Bank Competition Reduce Cost of Credit? Cross-country Evidence from Europe, Journal of Banking and Finance October (2017). Fungáčová Zuzana; Shamshur, Anastasiya; Weill, Laurent


Category A Peer-reviewed scientific articles
Sub-category A1 Journal article (refereed), original research
auki Internal authors
All authors as text Fungáčová Zuzana; Shamshur, Anastasiya; Weill, Laurent 
Number of authors
Status Published
Year of publication 2017 
Date 15.07.2017 
Name of article Does Bank Competition Reduce Cost of Credit? Cross-country Evidence from Europe 
Name of journal Journal of Banking and Finance
Volume of issue 83 
Number of issue October 
Pages 104-120 
Abstract 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.
Free text descriptor in Finnish pankkitoiminta; kilpailu; luotot; hinnat; kilpailu; Eurooppa 
Free text descriptor in English Bank competition; Bank concentration; Cost of credit 
JEL-codes G21; L11 
ISSN / e-ISSN 0378-4266 
auki Internet addresses
Additional information Available online 27 June 2017
Notes BOFIT Discussion Papers 6/2016 
Open Access Not open


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