Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154416
Authors: 
Belke, Ansgar
Haskamp, Ulrich
Setzer, Ralph
Year of Publication: 
2016
Series/Report no.: 
ECB Working Paper 1983
Abstract: 
This paper examines whether European regions which incorporate banks with a higher intermediation quality grow faster and are more resilient to negative shocks than its less efficient peers. For this purpose, we measure a bank's intermediation quality by estimating its pro t and cost efficiency while taking the changing banking environment after the financial crisis into account. Next, we aggregate the efficiencies of all banks within a NUTS 2 region to obtain a regional proxy for fi nancial quality in twelve European countries. Our results show that relatively more pro t efficient banks foster growth in their region. The link between fi nancial quality and growth is valid both in the pre-crisis and post-crisis period. These results provide evidence to the importance of swiftly restoring bank pro tability in euro area crisis countries through addressing high non-performing loans ratios and decisive actions on bank recapitalization.
Subjects: 
bank efficiency
Europe
financial development
regional growth
JEL: 
G21
O16
O47
O52
Document Type: 
Working Paper

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