Abstract:
[Conclusion] This module tests whether regional differences in banking market competition and other bank traits can explain differences in regional industry output growth. For identification we rely on the assumptions that different sectors of the economy require structurally different levels of external finance as in Rajan and Zingales (1998) and that banking markets are regionally delineated. In addition to aggregate industry growth, we decompose output growth into three components as suggested in Basu et al. (2009) and applied to primarily German micro firms in Inklaar et al. (2012). [...]