Bank Consolidations, Institutions and Economic Development : Evidence From Asia

Sutopo, Bambang and , Atmaji and Soedarmono, Wahyu and Trinugroho, Irwan (2010) Bank Consolidations, Institutions and Economic Development : Evidence From Asia. IbM.

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    This research investigates the impact of bank consolidation (market power) and country-level institutional development on macroeconomic performance. In general, the empirical results from a sample of commercial banks in 11 Asian countries over the period 2002-2007, show that greater bank market power enhances macroeconomic performance, which would not be the case as economic freedoms increase. If we consider different economic sectors, greater bank market power only enhances tradable sector growth, but impedes non-tradable sector growth. On the contrary, as economic freedoms increase, greater bank market power deteriorates tradable sector growth, but boosts non-tradable sector growth. In countries with higher economic freedoms, therefore, enhancing bank competition is necessary, since greater bank market power impedes productive growth through tradable sector and spurs booms in non-tradable sector, which may result in an increase in speculations.

    Item Type: Article
    Subjects: H Social Sciences > HC Economic History and Conditions
    H Social Sciences > HG Finance
    Divisions: Lembaga Penelitian dan Pengabdian Kepada Masyarakat - LPPM
    Depositing User: Lia Primadani
    Date Deposited: 15 Apr 2014 00:42
    Last Modified: 15 Apr 2014 00:42

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