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Big Banks and Macroeconomic Outcomes: Theory and Cross‐Country Evidence of Granularity

Referierte Aufsätze Web of Science

Franziska Bremus, Claudia M. Buch, Katheryn N. Russ, Monika Schnitzer

In: Journal of Money, Credit and Banking 50 (2018), 8, S. 1785-1825


Does the mere presence of big banks affect macroeconomic outcomes? We develop a theory of granularity for the banking sector by modeling heterogeneous banks charging variable markups. Using data for a large set of countries, we show that the banking sector is indeed “granular,” as the right tail of the bank size distribution follows a power law. We demonstrate empirically that the presence of big banks, measured by a high degree of market concentration, is associated with a positive and significant relationship between bank‐level credit growth and aggregate growth of credit or GDP.

JEL-Classification: E31;G21
Keywords: granularity, concentration, bank competition, macroeconomic outcomes, markups