Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156209
Authors: 
Belke, Ansgar
Haskamp, Ulrich
Setzer, Ralph
Year of Publication: 
2015
Series/Report no.: 
ROME Discussion Paper Series 15-07
Abstract: 
The financial crisis affected regions in Europe in a different magnitude. This is why we examine whether regions which incorporate banks with a higher intermediation quality grow faster in 'normal' times and are more resilient in 'bad' ones. For this purpose, we measure the intermediation quality of a bank by estimating its profit 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 financial quality in twelve European countries. Our results show that relatively more profit efficient banks foster growth in their region. The link between financial quality and growth is valid in 'normal' and in 'bad' times. These results provide evidence to the importance of swiftly restoring bank pro_tability in euro area crisis countries through addressing high nonperforming loans ratios and decisive actions on bank recapitalization.
Subjects: 
bank efficiency
financial development
regional growth
Europe
JEL: 
G21
O47
O52
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.